And now, in view of the skepticism which will doubtless greet this novel division into "processes," I venture, in its defense, to invoke analogy. No doubt (as the revered Professor Hill used to inculcate unsparingly) analogy is not argument. Nevertheless, it is often helpful and plausible. And I see a plausible analogy in physical training.

There are four processes or stages in physical training. (1) First come the individual muscles. We have at our disposal a score of different "chest-weight" exercises; each of them will reach a specific set of muscles. Suppose that we have carefully developed each one to a degree. (2) But we are yet unskilled in their coördination. Here the parallel bars, the horizontal bars, the rings, and other apparatus train us to use several sets of muscles at once, each playing a part and adjusting itself at the right moment to the others, to attain a total result. But thus far we are using muscles only. (3) The other bodily functions (lungs, stomach, etc.) remain to be drilled and coördinated with the muscles; endurance and economy of effort must be cultivated. Sparring, wrestling, fencing, track athletics, do this. They represent a stage beyond the former two. (4) But as yet the task is individual only. It must now become social. The whole skill of each Ego must merely contribute as a subordinate part of a larger whole. Team athletics supply this,— baseball, football, and the rest.

Here, then, are four distinct processes in athletic activity. No complete athlete can lack any of the four. Sound training must include specific and systematic attention to all four. A man who went no further than specializing in chest-weights would be athletically imperfect. And the most skilled team-player must possess a general foundation in individual muscle-development.

What I now point out, therefore, in legal education, is that, if these distinct processes be recognized to exist, each must be consciously cultivated by methods specifically adapted to that purpose.

VIII
CONCLUSION

To sum up: I invite assent to the following theses:

That Law is dealt with, in nature and in thought, by six distinct mental activities or processes, the analytic, the historic, the legislative, the synthetic, the comparative, the operative;

That these six processes have greater or less importance at different epochs of a community's legal life; and that in our present epoch the second, third, fourth, and fifth have a relative importance which they have not had for a century past;

That the case-study method, as hitherto practiced, develops mainly the first only; and yet that method represents five-sixths or more of the student's activity under the ordinary curriculum of today; and that this is disproportionate;

That therefore greater relative place should be given to the others (relegating the analytic process to, say, one half of the course); and that more suitable methods and materials should be provided for their adequate cultivation.

NORTHWESTERN UNIVERSITY LAW SCHOOL.

John H. Wigmore.

THE

GOOD AND BAD TRUSTS

HE term "trusts" has now come to refer to extensive combinations of capital in the commercial and industrial world, regardless of what the form of the organization may be. The combination may be by the agreement of the units combining that they will sell through a common board or committee, or by the device of trustees holding under a trust agreement stock controls in subsidiary corporations, or the controlling interests in partnerships and other forms of industrial and commercial units,2 or by a parent corporation holding stock controls in subsidiary corporations, or by the actual purchase of plants and their operation as a single industrial unit by a single corporation. In describing the size of the combination which is sufficient to warrant its being called a "trust," we may adopt the phraseology of the government in its brief in the International Harvester and Steel Cases. The combination to be a trust must embrace "units which together occupy a preponderant position in a given industry." To ask whether a trust is good or bad is only to ask where the line shall be drawn between combinations which are legal and those which are illegal. It will be convenient in the beginning to indicate, first those that are clearly illegal, and then those that are clearly legal. By this process we shall arrive at the debatable ground.

I

Since the Standard Oil and Tobacco Cases, it has become articulate that a combination of capital (in whatever form) which, by

1 This was the form of the combination attacked by the government in United States v. Addyston Pipe & Steel Co., 85 Fed. 271 (1898); Addyston Pipe & Steel Co. v. United States, 175 U. S. 211 (1899).

2 This was the form of the combination known as the Standard Oil Trust under the Standard Oil Trust agreement of 1882. State v. Standard Oil Co., 49 Oh. St. 137, 30 N. E. 279 (1892); Standard Oil Co. v. United States, 221 U. S. 1 (1910).

3 This was the form of organization of the Standard Oil Company of New Jersey as it was reorganized in 1899. Standard Oil Co. v. United States, 221 U. S. 1 (1910). ♦ This was the form of the combination of the International Harvester Company. United States v. International Harvester Co., 214 Fed. 987 (1914).

5 Standard Oil Co. v. United States, 221 U. S. 1 (1910); United States v. American Tobacco Co., 221 U. S. 106 (1910).

reason of its size and preponderant position in the business, has the power and the purpose, or uses its power to exclude others from the business by illegal acts and unlawful and unfair methods of competition, is an attempt at monopoly, and a restraint of trade and illegal at common law, and, if interstate commerce is involved, under the Sherman Act. It is what may be called a bad trust.

It seems incredible that anyone ever should have doubted the soundness of this proposition. The common-law conception of monopoly was that of a business carried on to the exclusion of others. Formerly this was effected by the exercise of the proper governmental authority which directly excluded all but the favored person from carrying on the business and imposed penalties upon anyone who violated the excluding mandate. When, however, the crown attempted to grant the privilege of carrying on a trade exclusively of all others its action was held void in the Case of Monopo

6 Continental Wall Paper Co. v. Voight & Sons Co., 212 U. S. 227 (1908); United States v. Motion Picture Patents Co., 225 Fed. 800 (1915) (semble); United States v. Eastman Kodak Co., 226 Fed. 62 (1915); 230 Fed. 522 (1916); United States v. Corn Products Refining Co., 234 Fed. 964 (1916); Dunbar v. American Telephone Co., 224 Ill. 9, 79 N. E. 423 (1906); 238 Ill. 456, 87 N. E. 521 (1909); Distilling & Cattle Feeding Co. v. People, 156 Ill. 448, 41 N. E. 188 (1895); Arnot v. Pittston & Elmira Coal Co., 68 N. Y. 558 (1877).

One of the early examples of combination (often on rather a small scale) which had the purpose to exclude others by means of an unlawful excluding practice, is found in the cases where several competitors secretly combined and eliminated competition, while pretending to the public to be competing. Craft v. McConoughy, 79 Ill. 346 (1875); Fairbank v. Leary, 40 Wis. 637 (1876). This device obviously deceived the public and tended to keep others out of the business, since one would be less likely to enter a field already occupied by a considerable number of competitors, than if obliged to contend with only one other unit.

On the same principle the secret combination of bidders not to bid against each other at an auction is illegal. Gibbs v. Smith, 115 Mass. 592 (1874); Woodruff v. Berry, 40 Ark. 251 (1882); National Bank of the Metropolis v. Sprague, 20 N. J. Eq. 159 (1869).

7 3 INST. 181; Kellogg v. Larkin, 3 Pinney (Wis.) 123 (1851).

Chappel v. Brockway, 21 Wend. (N. Y.) 157, 163 (1839). ("The defendant can gain nothing by giving the transaction a bad name, unless the facts of the case will bear him out. He calls this a monopoly. That is certainly a new kind of monopoly which only secures the plaintiff in the exclusive enjoyment of his business as against a single individual, while all the world beside are left at full liberty to enter upon the same enterprise.")

The California Steam Navigation Co. v. Wright, 6 Cal. 258 (1856) (last quotation approved); HAWK. P. C., bk. 1, ch. 29 (quoted in the opinion of the court in Standard Oil Co. v. United States, 221 U. S. 1 (1910); Mitchel v. Reynolds, 1 P. Wms. 181 (1711). See also the many cases where the absence of any exclusion of others is noted as minimizing the tendency toward monopoly. Infra, note 17.

9

lies. In this decision the policy of the common law against monopoly in the sense of a special privilege to carry on a business to the exclusion of all others was established and found effective to nullify the grant of the crown. Quite recently large aggregations of capital occupying a preponderant position in the business have discovered that they possess a power (resulting from their size) to indulge in practices which actually operate to exclude smaller units from the field. Some of these were plainly unlawful, such as inducing another trader to break his contract, fraud, libel, intimidation, coercion, and transportation rebates. These may be called "unlawful competition." Other excluding practices were more subtle and have become known as "unfair methods of competition." They are methods which may be lawful and proper when used by one unit against another which can retaliate on fairly even terms with the same methods.10 They become unfair and unlawful at least when used by a unit occupying a preponderant position against a smaller one, which, because it is smaller, cannot retaliate effectively. Of these the most obvious and best known is "local price-cutting." "1 The large unit can put the small one out of business by price-cutting below cost in the locality or the market which the smaller unit serves. By thus demolishing each small unit singly, it may exclude all from the field. This was not, of course, as effective as an act of Parliament. Such methods might never result in an actual monopoly. But they were effective to accomplish enough in that direction to be an illegal attempt at monopoly. If the crown was denied on grounds of public policy any power to grant an exclusive privilege to carry on a business, is it not quite plain that a similar privilege granted by a "trust" to itself would be an illegal attempt at monopoly and a restraint of trade entirely contrary to the common law, and, if interstate commerce was involved, void under the Sherman Act?

The fact that the mere combination of competing railroads, or other competing public service corporations operating under special franchises, is illegal at common law and under the Sherman Act,

8 11 Rep. 84 (1603).

9 See WYMAN, CONTROL OF THE MARKET, 36 et seq.

10 Mogul Steamship Co. v. McGregor, Gow & Co., [1892] A. C. 25.

11 Other methods of unfair competition are listed and explained in an admirable article on Unfair Competition by William S. Stevens, 29 POL. SCI. QUART. 282, 461.