(c) Corporations may not consolidate without statutory consent, and then only in the manner pre scribed by the statute. The Sugar Trust was con demned by the Court of Appeals of New York on the ground that it amounted to a consolidation of the constituent companies and that it did not observe the provisions of the statute relating to consolidations.
(d) Corporations may not hold stock of other com panies without statutory authority. Therefore a holding company may not be formed unless the state has enacted a statute permitting corporations to hold stock of other companies.
4. Anti-trust statutes.—It would seem that these various provisions of the common law of monopolies and of the common law of corporations should have been sufficient to protect the public against the trusts. But public opinion, during the last two decades of the nineteenth century, was strongly opposed to these combinations. It had to find expression in legislative enactment. The states and the Federal government took up the question at about the same time and thru the authority of legislative acts prohibited the forma tion of trusts.
Most state laws declare unlawful contracts and combinations in restraint of trade or competition.
They declare that guilty parties, if individuals, are to be punished by fine and imprisonment ; if domestic cor porations, they are to lose their charters, and if foreign corporations, they are to be ousted from the state. In some jurisdictions, notably Texas, the trust laws have been vigorously enforced. In most states, per sons injured by a combination are given a right of ac tion, and usually the method of calculating damages is defmed.
5. Sherman Act and In 1890 Congress passed the Sherman Anti-Trust Act. Several amendments have since been added, in-. eluding the Expedition Act, by virtue of which ap peals from decisions of the lower courts may be taken directly to the Supreme Court. The most notable of these amendments are the Federal Trade Commission Law and the Clayton Act of 1914.
6. Meaning of Federal the person who does not recognize the far-reaching effect of the Sherman Law on business, nmst be an in different member of society. During the twenty-five years of its existence its terms have been discussed , its meaning analyzed and its effect predicted. The United States Supreme Court never had a more difli cult task before it than to interpret the meaning of the anti-trust laws and to apply the laws properly in connection with the large interests whose fates have rested upon their momentous decisions.
Some claitn that the court has faced about com pletely in its attitude toward the law, since at first it seemed decidedly indifferent. Possibly in the first case under the law, U. S. vs. E. C. Knight Company (1895), the court did not fully appreciate the statute, and therefore did not recognize the strength of pub lic opinion in favor of the act. It has been hinted that the trust lawyers were too crafty for the government attorneys who had charge of the prosecution. But when, in 1898, the railroad pool (U. S. vs. Joint Traffic Association), which had been formed under an agreement that seemed carefully drawn to avoid the statute, was legally dissolved, many people thought that the court swung over to the other ex treme when it used this language: By the simple use of the term, contract in restraint of trade, all contracts of that nature, whether valid at common law or otherwise, would be included, and not alone that kind of contract which was invalid or unenforcible as being in re straint of trade.
The public awaited anxiously some further expres sion from the court. Certainly, it was argued, the court could not mean all that could be implied from that sentence standing alone and by itself. If Jones sold his business to Smith and retired, the contract of sale, it would seeni, would be invalid. Moreover, the business man insisted, there is a distinction be tween restraint of competition and restraint of trade. The former is not interdicted; only the latter. And a combination might reduce the extent of competition, but not its intensity; for if some of the competitors combined, the competition would be between giants and not pygmies.
Finally, in 1911, the Standard Oil Company and the American Tobacco Company were dissoh;ed. This action seemed to indicate that the court had re verted to the opinion it held when the common law was relied upon. The "rule of reason" promulgated in these cases simply -means that the court will try to look at the facts of each case as it comes forward. No arbitrary rule—such as the one which states that a combination composed of fifty per cent of the con cerns in any industry is a violation of the law—will be set up. But the effects of all the acts done will be weighed, and if .it is proved that those acts have injured the public they will be condemned and the guilty par ties will be punished. Since these decisions were an nounced, several other important cases have been de .cided. Others are still pending.