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is first considered, and if it be not involved and the restraint upon one party is no greater than protection 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 reasonable.

Let me give an illustration showing the difference between a reasonable and unreasonable arrangement or contract at common law. First, as to a reasonable one:

The case of a sale of a business and its good will is a good illustration. Here a restricted covenant upon the part of the vender not to engage in competition in a similar business is often the main consideration for the transaction. This covenant is, of course, in restraint of trade and interferes with competition. But to make a contract such as this illegal is not only restrictive of the liberty of contract, but it is depriving one of his property without due process of law. Good will is property capable of being appraised, bought, and sold. In many cases it is the main ingredient of value. It represents all the struggle, industry, tact, and judgment that makes success. In estimating the worth of a business it is not infrequently reckoned more valuable than the buildings and machinery that make up the physical plant. Such a contract has been held reasonable and valid.

Now as to an unreasonable agreement, let me quote an illustration from the pen of a justice of the Supreme

court:

In Morris Run Coal company vs. Barclay Coal company (in the Supreme court of Pennsylvania) the principal question was as to the validity of a contract made between five coal corporations of Pennsylvania, by which they divided between themselves two coal regions of which they had the control. The referee in the case found that those companies acquired under their arrangement the power to control the entire market for bituminous coal in the northern part of the state, and their combination was, therefore, a restraint upon trade and against public policy. In response to the suggestion that the real purpose of the combination was to lessen expenses, to advance the quality of coal, and to deliver it in the markets intended

to be supplied in the best order to the consumer, the Supreme court of Pennsylvania said:

"This is denied by the defendants, but it seems to us it is immaterial whether these positions are sustained or not. Admitting their correctness, it does not follow that these advantages redeem the contract from the obnoxious effects so strikingly presented by the referee. The important fact is that these companies control this immense coal field; that it is the great source of supply of bituminous coal to the state of New York and large territories westward; that by this contract they control the price of coal in this extensive market, and make it bring sums it would not command if left to the natural laws of trade; that it concerns an article of prime necessity for many uses; that its operation is general in this large region, and affects all who use coal as a fuel, and this is accomplished by a combination of all the companies engaged in this branch of business in the large region where they operate. The combination is wide in scope, general in its influence, and injurious in effects. These being its features, the contract is against public policy, illegal, and, therefore, void."

The question of reasonableness is thus one for the courts to determine, and it is manifest that this doctrine gives play to just considerations of the freedom and inviolability of contracts with proper judicial safeguards against unconscionable arrangements rightly void as contrary to public policy. The Sherman act is entitled "an act to protect trade and commerce against unlawful restraints," etc., and the able dissenting opinion in one of the leading cases in the Supreme court argues from this indication and other considerations that the restraints intended to be stricken off were only those unreasonable restraints as defined at common law. But the law was authoritatively decided to include all restraints, whether reasonable or unreasonable. Nevertheless, in extending the law it might be deemed wise by congress not to import and impose this distinction clearly, for the following reasons among others: Because the hard and fast extreme rule may work injustice in various instances where a moderate restraint is either not harmful at all to the general interests, or only slightly so in comparison with the importance of the

freedom and sacredness of many contracts which public policy does not manifestly condemn; because the question of reasonableness, as in the common law, should be for the courtssurely the safest arbiter and reliance in human disputes-and because, from the economic standpoint, freer play would thus be given, and perhaps "a way out" indicated, in the conflict between the important principles of free competition and combination.

We have no certain knowledge of the nature and effect of the natural laws which are carrying forward evolution in economic and social phenomena as in all other branches of biology. But we may be confident that in some sort and with whatever perversions, public policies, constitutional charters of government, and municipal laws roughly manifest these natural laws and reflect their main tendencies. Proper free play of forces might be maintained, by importing into the situation the idea of "reasonableness" and judicial determination thereof, for the control of unnecessarily destructive competition; and, for preventing the opposite danger, by devising a system of regulation which would strike the evils of combination at the heart and aid in the great object of restraining hurtful restraints and monopolies, especially as to the prime necessities of life.

The conditions of our commercial life are, as I have said, the result in part of an evolution of forces of world-wide operation. They have developed gradually and are not, perhaps, fully understood. Laws regulating and controlling their operation, before they ripen into a complete system of wise jurisprudence, will be of gradual growth.

HOW CONGRESS MAY CONTROL TRUSTS.

BY JEREMIAH W. JENKS.

[Jeremiah W. Jenks, economist; born St. Clair, Mich., Sept. 2, 1856; graduated University of Michigan, 1878; studied law and was admitted to the Michigan bar; instructor in Greek, Latin, and German at Mount Morris college, 1881-85; professor of political science, Knox college, 1886-89; professor of political economy and social science Indiana university, 1889-91; expert agent of the United States industrial commission for investigation of trusts and industrial combinations, 1899-1901, since which time he has been consulting expert of the United States department of labor on that subject; was sent by the war department of the United States as a special commissioner to investigate economic policies and conditions in the Orient, 1901-02. Author of The Trust Problem, Trusts and Industrial Combinations, Vol. VIII., Report Industrial Commission on Industrial Combinations in Europe, etc.] Copyright 1902 by The Outlook Company

It is generally conceded that state action to control trusts is and must be ineffective owing to differing laws in separate states. Congress, in the Sherman anti-trust law, has taken one step toward their control. The best legal authorities who have given special study to the question are of the opinion that, without constitutional amendment, congress may now take further positive and effective action. The question remains, What action is wisest? Three important suggestions have been made; we attempt to weigh briefly their relative merits.

1. Attorney General Knox made a notable address at Pittsburg, in which, with the acumen as well as the caution of a great lawyer, he told what the present government had done in restraining trusts, and indicated in general terms what more congress might do. He seems to have amplified the views of the president. Although his recommendations were not specific, his suggestions seem to mean this:

(a) Under the Sherman act it has been decided that combinations in restraint of interstate commerce, whether reasonable or unreasonable, are illegal and punishable. In his judgment—and in this judgment most thoughtful men since the decision in the Addyston Pipe case agree-it is wise to permit any partial or even complete restraints of trade that are in their nature reasonable, while punishing severely those that are unreasonable. The courts, as under the com

mon law, should determine what is reasonable and what is unreasonable.

(b) His chief recommendation, however, looks toward extension of the scope of the Sherman anti-trust act. Following a line of argument parallel with that used by Mr. F. J. Stimson and Prof. E. W. Huffcut, as found in the reports of the United States industrial commission, he expresses the opinion that congress has the power to lay down the conditions under which corporations may engage in interstate commerce, and to prescribe penalties for the violation of such conditions. The constitutional power seems to be clear; but he does not state categorically what conditions he would impose. The implication in his address, however, from the evils enumerated and from the principles discussed, is that corporations doing an interstate business ought to be required (1) "to do business in every state and locality upon precisely the same terms and conditions. There should be no discriminations in prices, no preferences in service." (2) They should be subject to "visitorial supervision;" secrecy in the conduct or result of their operations should be prohibited by law.

These conditions might be enforced only by penalties imposed by the courts after a violation of the act had been proved in a specific case brought by an injured party by a government attorney, as the Sherman anti-trust act is enforced. This plan would be conservative; it would leave the burden of proof on the prosecutor, and probably would not be generally effective. It would, however, be certain, in course of time, to give us some extremely important decisions and indications for further action. Congress might, however, following the plan of several states in dealing with insurance companies, partly shift the burden by providing that before any corporation engaged in interstate traffic it should procure a permit or license from some authority duly established in the act (a bureau of the new department of commerce, an officer of the treasury, or otherwise). It would then regularly furnish such information regarding its business as the law demanded; it could be regularly inspected to enforce compliance with the conditions laid down; and any corporation engaging in interstate commerce without such license would be

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