John Hessin Clarke

“ This is not the conduct of competitors, but is so clearly that of men united in an agreement, express or implied, to act together and pursue a common purpose under a common guide that, if it did not stand confessed a combination to restrict production and inincrease prices in interstate commerce, and as, therefore, a direct restraint upon that commerce, as we have seen that it is, that conclusion must inevitably have been inferred from the facts which were proved. ”

“ Co-operative competition, not cutthroat competition. Co-operation is a matter of business, because it pays, because it enables you to get the best price for your product, because you come into closer personal contact with the market.
'Co-operation will only replace undesirable competition as you develop a co-operative spirit. For the first time in the history of the industry, the hardwood manufacturers are organized into one compact, comprehensive body, equipped to serve the whole trade in a thorough and efficient manner. * * * More members mean more power to do more good for the industry. ”

“ May not these hardwood lumber concerns, frustrated in their efforts to rationalize competition, be led to enter the inviting filed of consolidation? And, if they do, may not another huge trust, with highly centralized control over vast resources, natural, manufacturing, and financial, become so powerful as to dominate competitors, wholesalers, retailers, consumers, employees, and, in large measure, the community? ”

“ It is plain that the only element lacking in this scheme to make it a familiar type of the competition suppressing organization is a definite agreement as to production and prices. But this is supplied: By the disposition of men 'to follow their most intelligent competitors,' especially when powerful; by the inherent disposition to make all the money possible, joined with the steady cultivation of the value of 'harmony' of action; and by the system of reports, which makes the discovery of price reductions inevitable and immediate. ”

“ For the essence of restraint is power; and power may arise merely out of position. Wherever a dominant position has been attained, restraint necessarily arises. And when dominance is attained, or is sought, through combination-however good the motives or the manners of those participating-the Sherman Law is violated, provided, of course, that the restraint be what is called unreasonable. ”

“ It is claimed that the purpose of the Open Competition Plan was to lessen competition. Competition among members was contemplated and was in vigorous operation. The Sherman Law does not prohibit every lessening of competition; and it certainly does not command that competition shall be pursued blindly, that business rivals shall remain ignorant of trade facts, or be denied aid in weighing their significance. It is lawful to regulate competition in some degree. ”

“ But there is nothing in the Sherman Law to indicate that Congress intended to condemn co-operative action in the exchange of information, merely because prophecy resulting from comment on the data collected may lead, for a period, to higher market prices. Congress assumed that the desire to acquire and to enjoy property is the safest and most promising basis for society, and to that end it sought, among other things, to protect the pursuit of business for private profit. ”

“ When the demand for lumber is good and the prices are good, it is a strong temptation to the sawmill men to put night shifts at the mill and an extra logging crew in the woods and keep turning out lumber 24 hours in the day. The desire to cash in while the cashing is good is natural and easy to understand, but every sawmill man who contemplates putting on a night shift should stop long enough to reflect on the past history of the lumber business. ”

“ The absence of such information in the hardwood lumber trade enables dealers in the large centers more readily to secure advantage over the isolated producer. And the large concerns, which are able to establish their own bureaus of statistics, secure an advantage over smaller concerns. Surely it is not against the public interest to distribute knowledge of trade facts, however detailed. Nor are the other features of the Plan-the market letters and the regional conferences-an unreasonable interference with freedom in trade. ”

“ Concerning grain, cotton, coal, and oil, the government collects and publishes regularly, at frequent intervals, current information on production, consumption, and stocks on hand; and Boards of Trade furnish freely to the public details of current market prices of those commodities, the volume of sales, and even individual sales, as recorded in daily transactions. Persons interested in such commodities are enabled through this information to deal with one another on an equal footing. ”

“ The hardwood lumber mills are widely scattered. The principal area of production is the Southern States. But there are mills in Minnesota, New York, New England, and the Middle States. Most plants are located near the sources of supply, isolated, remote from the larger cities and from the principal markets. No official, or other public, means have been established for collecting from these mills and from dealers data as to current production, stocks on hand, and market prices. ”

“ There is no claim that by agreement, force or fraud, any producer, dealer, or consumer was to be or has in fact been controlled or coerced. The Plan is a voluntary system for collecting from these independent concerns detailed information concerning the business operations of each, and its opinions as to trade conditions, prospects, and policy, and of collating, interpreting, and distributing the data so received among the members of the Association and others. No information gathered under the Plan was kept secret from any producer, any buyer, or the public. ”

“ After stating that the purpose was not to restrict competition or to control prices but to 'furnish information to enable each member to intelligently make prices and to intelligently govern his production,' the committee continues:
'The chief concern of the buyer, as we all know, is to see that the price he pays is no higher than that of his competitors, against whom he must sell his product in the market. The chief concern of the seller is to get as much as anybody else for his lumber ”

“ By making prices known to each other they will gradually tend toward a standard in harmony with market conditions, a situation advantageous to both buyer and seller.'
Not long after the consolidation, a further explanation of the objects and purposes of the Plan was made in an appeal to members to join it, in which it is said:
'The theoretical proposition at the basis of the Open Competition Plan is that
'Knowledge regarding prices actually made is all that is necessary to keep prices at reasonably stable and normal levels. ”

“ All of these reports by members are subject to complete audit by representatives of the association. Any member who fails to report shall not receive the reports of the secretary, and failure to report for twelve days in six months shall cause the member failing to be dropped from membership.
Plainly it would be very difficult to devise a more minute disclosure of everything connected with one's business than is here provided for by this Plan, and very certainly only the most attractive prospect could induce any man to make it to his rivals and competitors. ”

“ Its purpose, obviously, was not to prevent the making of profits, or to counteract the operation of the law of supply and demand. Its purpose was merely to prevent restraint. The illegality of a combination under the Sherman Law lies, not in its effect upon the price level, but in the coercion thereby affected. It is the limitation of freedom, by agreements which narrow a market, as in Addyston Pipe & Steel Co. ”

“ If he does indulge in such reflection the chances are he will give up any ideas he may have along that line. Overproduction has always been the curse of the lumber industry in America. It has caused more trouble and hardship than any other one factor. ”

“ To call the activities of the defendants, as they are proved in this record, an 'Open Competition Plan' of action is plainly a misleading misnomer.
Genuine competitors do not make daily, weekly, and monthly reports of the minutest details of their business to their rivals, as the defendants did ”

“ Men in general are so easily persuaded to do that which will obviously prove profitable that this reiterated opinion from the analyst of their association, with all obtainable data before him, that higher prices were justified and could easily be obtained, must, inevitably have resulted, as it did result, in concert of action in demanding them. ”

“ In making it available, also, to purchasers and the general public, it does all that can actually be done to protect the community from extortion. If, as is alleged, the Plan tends to substitute stability in prices for violent fluctuations, its influence, in this respect, is not against the public interest. ”

“ In the case before us there was clearly no coercion. There is no claim that a monopoly was sought or created. There is no claim that a division of territory was planned or secured. There is no claim that uniform prices were established or desired. ”

“ This is very clearly shown by the excerpts following from the minutes of meetings and from the market letters and sales reports distributed at them.
Thus, at the meeting held at Cincinnati, on January 21, 1919, in the discussion of business conditions, the chairman said:
'If there is no increase in production, particularly in oak, there is going to be good business. * * * No man is safe in increasing production. ”

“ It may exist, although it is not manifested in any overt act, and even though there is no intent to restrain. Words of advice, seemingly innocent and perhaps benevolent, may restrain, when uttered under circumstances that make advice equivalent to command. ”

“ The demand is with us, the supply inadequate, therefore values must increase, as our competition in hardwood is only among ourselves.'
Again, in another month, May 24th, in his sales report, the Manager of Statistics, after stating that production during the month of April was 65 per cent. of normal and that a careful estimate indicated that there would be no material increase in May and June, says:
'If any one tells you that lumber prices are coming down, call their attention to the following: Curtailed production of mills; stocks below normal ”

“ These keen business rivals, who sought through co-operative exchange of trade information to create conditions under which alone rational competition is possible, produce in the aggregate about one-third of the hardwood lumber of the country. This court held in United States v. U.S. Steel Corporation, 251 U.S. 417, 40 Sup. Ct. 293, 64 L. Ed. 343, 8 A. L. R. 1121, that it was not unlawful to vest in a single corporation control of 50 per cent. of the steel industry of the country ”