Since, however, each is recognized as a distinct ground for declaring combinations illegal, the classification may be adopted as both convenient and practical. For a full discussion of the legal doctrines relating to restraint of trade and conspiracy, reference should be made to those topics. With reference to conspiracy, it may be said that combinations are conspiracies, and therefore unlawful, when the purpose of the agreement or combination is either to do something unlawful or to do something lawful in an unlawful manner. In general, combinations are held to be illegal because of their purposes and methods when they restrain fair competition or create oppressive monopolies. Owing to the difficulty of applying this test to any particular case, it may be extremely difficult to draw a clear line of distinction between those combinations which are lawful and those which are unlawful.

At common law the remedies of individuals against acts of illegal combination are limited to the recovery of any damage suffered because of the unlawful conspiracy involved in the combination or to the securing of an injunction restraining those joined in the combination from doing some threatened injury to the plaintiff. In either case it is necessary for the plaintiff to show actual damage suffered by him or that the defendant threatened to do some act causing such damage. When the combination is in the corporate form and is acting outside its corporate powers, or its constituent corporations have ceased to act as separate corporations so as to amount to an abandonment of their charters, the State may proceed against the corporate combination or any of the constituent corporations to compel a forfeiture of its charter by quo warranto. 

There is, however, no other method at common law by which either the State or a private individual could proceed against a combination on the ground that it is illegal and is working a public injury. As a result of agitation upon the subject of Trusts, almost all of the United States have adopted statutes or clauses in their State constitutions restraining or prohibiting all contracts, agreements, undertakings, or combinations in restraint of trade or tending to create monopolies, whether such restraint would have been unlawful at common law or not. In general the courts have held that these statutes are constitutional under both State and Federal constitutions, and not in violation of the constitutional provisions against abridging the freedom of contract, depriving citizens of liberty or property without due process of law, or denying them equal protection of the laws. In the interpretation of these statutes, however, the courts have justly regarded them as an innovation upon the common law to be interpreted with strictness and caution.

Moreover, the difficulty of giving such legislation its proper effect without making it subversive of established rights of property has to some extent prevented all these restraining acts from having the effect intended. It may be said that the principal test to be applied in determining whether statutes of this class are violated is whether the act or agreement complained of was done with intent to control prices or whether such would be a natural result of the act or agreement. They usually provide that contracts made in connection with such an act or agreement shall be void, and attach criminal or quasi-criminal penalties for their violation. In some States parties injured by such violations of anti-monopoly statutes are given rights of action to recover damages for the injury suffered.

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 enterprises 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 Federal Government.

Trusts (continue)

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 business. 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 remembered that the charter or other legislative authority to a corporation to do business once granted is deemed to be a contract, and that the State is forbidden by the United States Constitution to impair the obligation of contract.

It will be seen that the powers of restriction just referred to are limited to corporations and have no application to natural persons or partnerships. The important above-mentioned limitations 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 practically unlimited power, have in effect seriously interfered with any effective statutory restriction of monopolies by the several States.

The Federal Government may to some extent restrain monopoly under cover of its constitutional power to regulate interstate and international commerce. Its power in this respect has been deemed to be practically absolute. It cannot, however, be said at this time (1903) that the power of Congress to control or restrain the business 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 unlawful, 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 1887 enacted the Interstate Commerce Act, having for its purpose the control and regulation of business carried on by common carriers engaged in interstate commerce. Its particular object was the prevention of unlawful discrimination in rates by common carriers engaged in interstate commerce, which had contributed in a large degree to the growth of monopolistic enterprises. This was followed in 1890 by a statute for the protection of interstate and international trade, commonly known as the Sherman Act (26 United States Statutes at Large, 209).

This statute provides that all contracts, combinations in form of Trusts or otherwise, or conspiracies in restraint of interstate or international commerce are illegal, and that all persons participating in such agreement, combination, 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 proceeding brought in behalf of the Government, and that a proceeding may be brought by the Attorney-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 authorized by a State, but that it is intended to apply to all direct restraints of trade by individuals or corporations, whether such restraints would have been deemed reasonable or unreasonable 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.