Charles Evans Hughes

“ Voluntary action to rescue and preserve these opportunities, and thus to aid in relieving a depressed industry and in reviving commerce by placing competition upon a sounder basis, may be more efficious than an attempt to provide remedies through legal processes. The fact that the correction of abuses may tend to stabilize a business, or to produce fairer price levels, does not mean that the abuses should go uncorrected or that co-operative endeavor to correct them necessarily constitutes an unreasonable restraint of trade. ”

“ We agree that there is no ground for holding defendants' plan illegal merely because they have not integrated their properties and have chosen to maintain their independent plants, seeking not to limit but rather to facilitate production. We know of no public policy, and none is suggested by the terms of the Sherman Act, that in order to comply with the law those engaged in industry should be driven to unify their properties and businesses in order to correct abuses which may be corrected by less drastic measures. ”

“ They call for vigilance in the detection and frustration of all efforts unduly to restrain the free course of interstate commerce, but they do not seek to establish a mere delusive liberty either by making impossible the normal and fair expansion of that commerce or the adoption of reasonable measures to protect it from injurious and destructive practices and to promote competition upon a sound basis. ”

“ Any one size cannot be prepared without making several sizes. According to the finding of the court below, one of the chief problems of the industry is thus involved in the practice of producing different sizes of coal even though orders are on hand for only one size, and the necessity of marketing all sizes. Usually there are no storage facilities at the mines and the different sizes produced are placed in cars on the producer's tracks, which may become so congested that either production must be stopped or the cars must be moved regardless of demand. ”

“ Realities must dominate the judgment. The mere fact that the parties to an agreement eliminate competition between themselves is not enough to condemn it. 'The legality of an agreement or regulation cannot be determined by so simple a test, as whether it restrains competition. Every agreement concerning trade, every regulation of trade, restrains.' Chicago Board of Trade v. United States, supra. The familiar illustrations of partnerships, and enterprises fairly integrated in the interest of the promotion of commerce, at once occur. ”

“ The ultimate finding of the District Court is that the defendants 'will not have monopoly control of any market, nor the power to fix monopoly prices'; and in its opinion the court stated that 'the selling agency will not be able, we think, to fix the market price of coal.' Defendants' coal will continue to be subject to active competition. In addition to the coal actually produced and seeking markets in competition with defendants' coal, enormous additional quantities will be within reach and can readily be turned into the channels of trade if an advance of price invites that course. ”

“ If the coal is not sold by the time it reaches its destination, and is not unloaded promptly, it becomes subject to demurrage charges which may exceed the amount obtainable for the coal unless it is sold quickly. The court found that this type of 'distress coal' presses on the market at all times, includes all sizes and grades, and the total amount from all causes is of substantial quantity.
'Pyramiding' of coal is another 'destructive practice.' It occurs when a producer authorizes several persons to sell the same coal, and they may in turn offer it for sale to other dealers. ”

“ If the mere size of a single, embracing entity is not enough to bring a combination in corporate form within the statutory inhibition, the mere number and extent of the production of those engaged in a co-operative endeavor to remedy evils which may exist in an industry, and to improve competitive conditions, should not be regarded as producing illegality. ”

“ The largest purchaser of coal in the states of North Carolina, South Carolina, Georgia, and eastern Tennessee who purchases approximately 600,000 tons of coal annually under normal conditions for use by textile mills, located in those states, has stated that the organization and operation of Appalachian Coals, Inc., will not control or dominate the price in the markets in which he purchases coal, and that he will be able to purchase coal in an open and competitive market.'↑ Supra, Pp. ”

“ While conditions are more favorable to the position of defendants' group in some markets than in others, we think that the proof clearly shows that, wherever their selling agency operates, it will find itself confronted by effective competition backed by virtually inexhaustive sources of supply, and will also be compelled to cope with the organized buying power of large consumers. ”

“ Coal has been losing markets to oil, natural gas and water power and has also been losing ground due to greater efficiency in the use of coal. The change has been more rapid during the last few years by reason of the developments of both oil and gas fields. The court below found that, based upon the assumption that bituminous coal would have maintained the upward trend prevailing between 1900 and 1915 in percentage of total energy supply in the United States, the total substitution between 1915 and 1930 has been equal to more than 200,000,000 tons per year. ”

“ Defendants insist that on the evidence adduced as to their competitive position in the consuming markets, and in the absence of proof of actual operations showing an injurious effect upon competition, either through possession or abuse of power, no valid objection could have been interposed under the Sherman Act if the defendants had eliminated competition between themselves by a complete integration of their mining properties in a single ownership. ”

“ Putting an end to injurious practices, and the consequent improvement of the competitive position of a group of producers is not a less worthy aim and may be entirely consonant with the public interest, where the group must still meet effective competition in a fair market and neither seeks nor is able to effect a domination of prices. ”

“ In consequence 'the coal competes with itself, thereby resulting in abnormal and destructive competition which depresses the price for all coals in the market.' Again, there is misrepresentation by some producers in selling one size of coal and shipping another size which they happen to have on hand. 'The lack of standardization of sizes and the misrepresentation as to sizes' are found to have been injurious to the coal industry as a whole. ”

“ There are 130 producers of coal other than defendants in Appalachian territory who sell coal commercially. There are also 'a large number of mines that have been shut down and could be opened up by the owners on short notice.' Competing producers testified that the operation of the selling agency, as proposed by defendants, would not restrain competition and would not hurt their business. ”

“ Coal produced from these districts is available for any market in which Appalachian coal is sold. Conditions in the coal industry are such that new companies are free to enter the business of producing and marketing coal in competition with existing companies.' In connection with this proof of developed and potential capacity, the 'highly organized and concentrated buying power' that can be exerted must also have appropriate consideration. [7]
Consumers testified that defendants' plan will be a benefit to the coal industry and will not restrain competition. ”

“ The evidence as to the conditions of the production and distribution of bituminous coal, the available facilities for its transportation, the extent of developed mining capacity, and the vast potential undeveloped capacity, makes it impossible to conclude that defendants through the operation of their plan will be able to fix the price of coal in the consuming markets. ”

“ Defendants insist that the primary purpose of the formation of the selling agency was to increase the sale, and thus the production, of Appalachian coal through better methods of distribution, intensive advertising and research, to achieve economies in marketing, and to eliminate abnormal, deceptive, and destructive trade practices. ”

“ The intelligent conduct of commerce through the acquisition of full information of all relevant facts may properly be sought by the co-operation of those engaged in trade, although stabilization of trade and more reasonable prices may be the result. ”

“ While strikes and interruptions of transportation may create temporary and abnormal dislocations, the bituminous coal industry under normal conditions affords most exceptional competitive opportunities. ”

“ This agency is the defendant Appalachian Coals, Inc., which may be designated as the Company. Defendant producers own all its capital stock, their holdings being in proportion to their production. The majority of the common stock. which has exclusive voting right, is held by seventeen defendants. By uniform contracts, separately made, each defendant producer constitutes the Company an exclusive agent for the sale of all coal (with certain exceptions) which the producer mines in Appalachian territory. ”

“ No attempt was made to limit production. The producers decided that it could not legally be limited and, in any event, it could not be limited practically. The finding is that 'it was designed that the producer should produce and the selling agent should sell as much coal as possible.' The importance of increasing sales is said to lie in the fact that the cost of production is directly related to the actual running time of the mines. ”

“ The railroads have improved combustion methods and reduced their fuel consumption from 1916 to 1929 by 32,000,000 tons. In freight service, their consumption of coal per thousand freight ton miles dropped from 164 pounds in 1919 to 125 pounds in 1929. The electric industries decreased consumption of coal per kilowatt hour from approximately 3.2 pounds to 1.6 pounds and thereby reduced their requirements for coal in excess of 47,000,000 tons. Efficiency in the smelting of pig iron decreased the consumption of coal in relation to the pig iron made by 10,000,000 tons. ”

“ The decree will be reversed, and the cause will be remanded to the District Court with instructions to enter a decree dismissing the bill of complaint without prejudice and with the provision that the court shall retain jurisdiction of the cause any may set aside the decree and take further proceedings if future developments justify that course in the appropriate enforcement of the Anti-Trust Act. ”

“ It suffered from overexpansion and from a serious relative decline through the growing use of substitute fuels. It was afflicted by injurious practices within itself practices which demanded correction. If evil conditions could not be entirely cured, they at least might be alleviated. ”

“ A representative of the Carbide & Carbon Corporation which uses annually about 250,000 tons of bituminous coal, 100,000 tons of coke made from bituminous coal, and 40,000 to 50,000 tons of petroleum coke, and operating plants that consume coal at South Charleston, W. Va.; Niagara Falls, N.Y.; Cleveland, Ohio ”