BY GILBERT HOLLAND MONTAGUE, OF THE NEW YORK BAR
(From the North American Review, November, 1910)
From the end of the Civil War until the passage of the Interstate Commerce Act and the Sherman Anti-Trust Act, popular faith in competition, unhindered by governmental interference, continued practically undisturbed. "In the early history of railroad transportation," said Attorney-General Moody, later Justice of the Supreme Court of the United States, in his annual report for 1906, "the practice of rebating was common, well understood, and not prohibited by any Federal statute. It was regarded as one aspect of the spirit of competition which the common law cherished." The last century conception of competition and freedom of contract and absolute individualism of conduct, unhampered by any legal restrictions, was rooted in the theory of the Declaration of Independence and the Constitution, and fostered by the tremendous commercial progress which it had produced. Against this principle, the Interstate Commerce Act, which prohibited private bargaining between the railroad and the shipper, and the Sherman Anti-Trust Act, which forbade the attainment of industrial dominance, toward which all competition aimed, seemed incongruous and irrational contradictions, -- weapons pusillanimously seized by the industrially unfit against their superiors.
The spiritless enforcement of these statutes, from the time of their enactment until 1903, shows how pharisaical they were generally considered by the community. "A careful examination," to quote again from Attorney-General Moody, "discloses that there were in those years seventy-nine indictments (under the Interstate Commerce Act), upon which the Government failed in sixty-two and succeeded in seventeen. No sentences of imprisonment were executed and the total fines amounted to $16,376. It is safe to say that these penalties, distributed over many years, were, as deterrents from the commission of prohibited offenses, a negligible factor." The indifferent enforcement of the Sherman Anti-Trust Act was still more conspicuous. Attorney-General Olney, in his annual report for 1893, protested "that as all ownership of property is of itself a monopoly, and as every business contract or transaction may be viewed as a combination which more or less restrains some part or kind of trade or commerce, any literal application of the provisions of the statute is out of the question." Reviewing the prosecutions, brought under the Sherman Anti-Trust Act during this period, Attorney-General Moody stated: "From the date of the enactment of the law to the beginning of