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 courts— surely 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

at once subject to penalty. The conditions could be made whatever congress deemed wise. The important conditions named by the attorney general which might be enforced by either of the methods mentioned merit consideration from the economic as well as from the legal point of view.

1. The publicity implied in the words "visitorial supervision" is a remedy which has been long and ably advocated, and beyond question, if it could be properly enforced, would be very serviceable. The corporations, however, which most abuse their power would make every effort to evade such supervision, and, as appears later, in many cases such evasion would be easy.

2. Discrimination in prices between different customers for the purpose of crushing rivals and strengthening monopoly, as Professor Clark, of Columbia university, has ably shown, is of three kinds: First, the great corporation sells at ruinously low rates in localities where rivals are at work, while recouping itself for the loss by demanding high prices elsewhere; second, with many kinds of products at its disposition, while its smaller rival has only one or two classes, it may, to destroy the rival, make ruinously low though everywhere uniform prices for these specific classes, while keeping high prices on its other products; in the third place, it may grant especially favorable terms to those purchasers who buy only its goods. It is perhaps too much to say that it is impossible to stop these practices, but any one who knows business will realize that it is extremely difficult to stop any of them, especially the second

Moreover, it is not absolutely clear that they should be stopped; such discriminations may at times be beneficial to society. A rival of a great combination often makes its way by giving special rates on certain articles used as leaders and by discriminations among customers. The principle of discrimination in freight rates on railroads, it is generally conceded, is evil, but railroads are natural monopolies. It is useless to talk of encouraging competition among them. On the other hand, the so-called trusts are in industries which are normally competitive, and we wish to keep them so. If, then, rivals in competitive trade against the great corporations