United States Steel: A Corporation with a Soul

by Arundel Cotter

“For of the conduct of the Steel Corporation, the views of its competitors are the best gauge. Monopoly and unreasonable restraint of trade are, after all, not questions of law, but questions of hard-headed business rivalry, and whether there is monopoly of an industry, whether trade is subjected to unreasonable restraint, whether there is unfair competition, are facts about which business competitors best know and are best qualified to speak. And it may be accepted as a fact that where no competitor complains, and much more so, where they unite in testifying that the business conduct of the Steel Corporation has been fair, we can rest assured there has been neither monopoly nor restraint. Indeed, the significant fact should be noted that no such testimony of acts of oppression is found in this record as was given by the competitors of the Tobacco or Standard Oil companies in the suits against those companies. We have carefully examined all the evidence given by competitors of the Steel Corporation. We have read the testimony of customers who purchased both from it and from its competitors. Its length precludes its recital here, but we may say its volume, the wide range of location from which such witnesses came, and their evidently substantial character in their several communities, make an inevitable conclusion that the field of business enterprise in the steel business is as open to, and is being as fully filled up by the competitors of the Steel Corporation, as it is by that company.”

Next the Court turns to “that most injurious feature of monopoly’s wrong to the public, to wit, increase in the price of its product or a deterioration in quality.” It disposes of the question of quality first thus:

“No dispute arises under the proofs. They are simply uniform that, both with independents and the Steel Corporation, there has been a steady bettering of quality in steel products.”

The question of prices it discussed at some length and intimated that there had been no evidence presented to show that the Corporation had unduly raised prices, while a large number of steel consumers had agreed in testifying that active competition in prices for steel existed between the Corporation and the independent companies, which would alone indicate that prices had been only such as ordinary business practice warranted. The Court added: “The Steel Corporation has adopted a policy of price publicity and adherence, somewhat analogous to the freight-rate stability followed by the railroads under the directions of the Interstate Commerce Commission.”

Next the Court considered the subject of restraint of trade in the export or international field and found that: “we are warranted in holding that the foreign trade of the Steel Corporation, its mode of building it up, and its retention when built up, are not contrary to the Sherman Law. To hold otherwise would be practically and commercially to enjoin the steel trade of the United States from using the business methods which are necessary in order to build up and maintain a dependable business abroad, and if the Sherman Law were so construed, it would itself be a restraint of trade and unduly prejudice the public by restraining foreign trade.”

On the charge that the inherent nature of the Corporation was monopolistic, that the object of its organizers in bringing it together was for restraining trade the Court says, in part:

“In view of the fact that the proportionate volume of competitive business has increased since the Steel Company was formed and that the proofs show no attempt by it to monopolize it to the exclusion of its competitors, to now attribute to those who formed the Corporation an intended monopolization would be to say that, having formed the Corporation for the purpose of monopoly, they immediately abandoned such purpose and made no effort to accomplish it.”

The Court disposes of the matter of the purchase of the Tennessee Coal, Iron & Railroad Co., and of other purchases of steel properties criticized by the Government, by saying: “We cannot but feel, in the light of the proofs, that they were made in fair business course and were, to use the language of the Supreme Court in the Standard Oil case, ‘the honest exertion of one’s right to contract for his own benefit unaccompanied by a wrongful motive to injure others.’”

Perhaps the most important point of divergence between the two opinions lies in the fact that Justice Woolley, with whom Justice Hunt concurred, held that it was the original purpose of the organizers of the Corporation to restrain trade. These judges found, however, that the big company did not attempt to exert a power, if it possessed it, to destroy its competitors; they say: “Upon the finding that the Corporation, in and of itself, is not now and has never been a monopoly or a combination in restraint of trade, a decree of dissolution should not be entered against it.”

In denying the petition for a dissolution of the Corporation the Court stated that it would, if requested by the Government, retain the bill of complaint to restrain further action of this sort by the defendant corporation.