A far more effective agency for restricting the growth of monopoly is the exercise of the power of the several States to control all corporate en terprises within their respective territories. A State may grant to a corporation its charter and power to do business upon such terms as the Legislature may choose, and it is also within the constitutional power of a State to impose any terms, however exacting, as a condition to which corporations created under the laws of other States must conform if doing business within its limits, provided such conditions do not interfere with interstate commerce, the power of regulation and control of which is by the United States Constitution lodged with the Fed eral Government.
A State may thus limit the amount of capital of a corporation organized under its laws; and it may by its charter or general laws existing at the time of its creation limit or regulate its }isi -0 ness. In the same manner a State may impose similar or even additional conditions upon all foreign corporations wishing to do business that is not interstate commerce within the State. In this connection, however, it should be remem bered that the charter or other legislative au thority to a corporation to do business once granted is deemed to be a contract, and that the State is forbidden by the 'United States Con stitution to impair the obligation of contract. See CORPORATION; CHARTER; DARTMOUTH COL LEGE CASE.
It will be seen that the powers of restriction just referred to are limited to corporations and have no application to natural persons or part nerships. The important above-mentioned limi tations upon the power of the States to control corporations, coupled with the fact that it has been the policy of many of the States to grant to corporations organized under their laws prae ticallv unlimited power, have in effect seriously interfered with any effective statutory restriction of monopolies by the several States.
The Federal novernment may to some extent restrain monopoly under cover of its constitu tional power to regulate interstate and inter national commerce. Its power in this respect has been deemed to be practically absolute. It can not, however, be said at this time (1903) that the power of Congress to control or restrain the busi ness of individuals or corporations by enactments that are not intended primarily for the purpose of controlling or regulating interstate commerce, but for the purpose of restricting, or making un lawful, or assuming control over, a business which is lawful and unrestricted in the several States, is without limitation, since that question has not been definitely and finally determined by the Supreme Court of the United States. Acting
under its power to regulate commerce, Congress in 18S7 enacted the interstate Commerce Act, having for its purpose the control and regula tion of business carried ou by common carriers engaged in interstate commerce. Its particular object was the prevention of unlawful discrimina tion in rates by common carriers engaged in interstate commerce, which had contributed in a large degree to the growth of monopolistic enter prises. This was followed in 1S90 by a statute for the protection of interstate and international trade, commonly known as the Sherman Act (20 United States Statutes at Large, 209).
This statute provides that all contracts, com binations in form of Trusts or otherwise. or conspiracies in restraint of interstate or inter national commerce are illegal, and that all per sons participating in such agreement. combina tion, or conspiracy are guilty of a misdemeanor and subject to a penalty for violation of the act. The statute also provides that all goods in transportation in violation of the act may be seized, and their forfeiture compelled by a pro ceeding brought in behalf of the Government. and that a proceeding may be brought by the Attor ney-General enjoining all acts in violation of the statute and for the dissolution of contracts entered into in violation of it.
It has been held by the courts that this act does not apply to monopolies created and au thorized by a State, but that it is intended to apply to all direct restraints of trade by in dividuals or corporations, whether such restraints would have been deemed reasonable or unrea sonable at common law. The restraint or monopoly need not be complete. The statute is violated if the contract or combination tends to such monopoly. Notwithstanding the scope and severity of the statute, it has been found not to be particularly effective in restraining the growth of monopolies or Trusts, so called, and it is not unlikely that further legislation of a similar character will be enacted.