Labor Unions and the Anti-Trust Law: A Review of Decisions

Author(s): C. J. Primm
Source: Journal of Political Economy, Vol. 18, No. 2 (Feb., 1910), pp. 129-138
Published by: University of Chicago Press
Stable URL: http://www.jstor.org/stable/1829777
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NOTES
LABOR UNIONS AND THE ANTI-TRUST
A REVIEW OF DECISIONS

LAW:

A review of decisions under the Sherman Anti-Trust Law

reveals two ways in which the law has been interpreted. One interpretationemphasizes the prohibition,contained in section two
of the act, against attemptingto monopolizeany part of interstate
trade. The otheremphasizesthe prohibitionsfoundin sectionsone
and three against all contractsor combinationswhich in any way
is
restraininterstatecommerce. The latter way of interpretation
the one accordingto which the labor unions and otherassociations
of individualsnot necessarilyengaged in capitalisticenterprisesare
included withinthe scope of the presentgovernmentalregulations
directedagainst trusts. One of the preconceptionsof Congressand
the courts has been that competitionis the essential conditionfor
industrialprogress,and thereforethatjustice to societydemandsits
then,as much
conservation. In accordancewith this preconception,
the
as owing to the wordingof the law, the courtshave interpreted
Sherman Act to apply to labor organizations. But though these
organizationsmay stiflecompetitionin the labor market,and though
for the manufacturersor the carriers,
they may create difficulties
it is not until they interferein some mannerwith interstatecommercethattheybecomeviolatorsof the Anti-TrustLaw. And even
then theyare proceeded against not because theyare labor unions,
but because they have done or attemptedsome act constitutinga
restraintupon interstatetrade. The acts for which they or their
membersare prosecutedare not necessarilyacts peculiar to labor
unions,but may be and oftenare such as a manufacturingconcern,
a railway,private parties or a single individualcould commitand
could be prosecutedforcommitting.From this view-point,however,
it would be only a short step to that fromwhich the trade union
as such, wherever found in relationto interstatetrade, would be
considereda trust.
The applicationof the ShermanAnti-TrustAct to Labor organizations occurred firstin I893 in the cases of Blindell v. Hagan
(February, I893; 54 F. 40) and U. S. v. Workingmen'sAmalga129

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JOURNAL OF POLITICAL

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mated Council (March, I893; 54 F. 995). They were both New

Orleans cases, and were heard by the same court. In the firstcase
the courtsaid thatthe jurisdictionof the circuitcourtto entertaina
suit to enjoin a combinationof persons frominterferingwith and
preventingshipownersfromgettinga crew may be maintainedon
the ground of preventinga multiplicity
of suits at law, and for the
reason that damages at law for interrupting
the business and interceptingthe profitsof pendingenterprisesand voyages must,in their
nature,be conjecturaland not susceptibleof proof.
The Workingmen'sAmalgamatedCouncil case was a case where
dock-laborersand others had preventedthe manning and loading
of ships at the port of New Orleans. In this case, as also in the
Debs case mentionedbelow, the court said that the Sherman act
was aimed not alone at either capital or contractualevils, but as
well at combinationsand conspiracies to restrain interstateand
foreigncommerceby force and violence. The court here further
said that a combinationof men to compel the employmentof only
union men becomes a combinationin restraintof interstatecommerce when,in orderto gain its ends, it seeks to enforce,and does
enforce,by violence and intimidation,
a discontinuationof labor in
all departmentsof business,includingthe transportationof goods
fromstate to state and fromforeignnations; and that the fact that
a combinationof men is in its origin and general purposes lawful
is no ground of defense when it undertakesto restraininterstate
and foreign commerce. In line with this attitude was the contemporaneousdecision in Waterhousev. Comer (0893; 55 F. I49)
that rule twelve (as it then stood) of the Brotherhoodof Locomotive Engineers, providing that engineers employed on roads
adjacent to one at war with the Brotherhoodshall not handle the
propertyof the offendingroad in any way profitableto that road
until the mattersat issue are all settled,1was illegal as being in
restraintof interstatecommerce.
The next year there appeared a group of decisions in which
combinationsof strikingrailway workmenand their union leaders,
purposingby threats,persuasion,and advice to tie up certainroads
and prevent them from carrying passengers and freight,were
'But where a trade union seeks by fair means to compel an employer of
its membersto observe one of its lawful rules, it cannot be restrainedtherefrom
on the ground that its object in enforcingthe rule is to create a monopoly of
labor in that particulartrade.-Longshore Printing and Publishing Co. v. Howell,
1894;

48 P. 547.

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NOTES

I3I

broughtunder the operationof this Act. The cases in whichthese

decisions were handed down having all arisen as a result of the
trouble and strike at Pullman, they are known as "the Pullman
Strike Cases." The most widely known case in this group is that
of U. S. v. Debs (64 F. 724). This is reallytwo cases in one, as
the opinionof the courtrefersto proceedingsfor contemptof court
against Eugene V. Debs and others for violations,of injunctions
which were issued, one on complaintof the United States and another on petitionof the receivers of the Atchison, Topeka, and
Santa Fe' Railroad Company (appointed in a suit against that road
on the part of the Union Trust Company). The injunctionsmentioned were issued in the summer of 1894 to restrainDebs and
all otherleaders and membersof the AmericanRailway Union, and
all those acting with them, from hinderingin any way the mail,
express, or other business on any of a long list of roads entering
Chicago thereinmentioned. These men had attemptedto prevent
and to incite others to preventthe handling of Pullman cars on
any road. In this case it was alleged that they had persisted in
their policy, which was in restraintof interstatetrade, after the
injunctionswere issued, and the evidence proved such to be the
fact. Under the Sherman Act, said the court in this case, "any
restraintof trade or commerce,if to be accomplishedby conspiracy,
is unlawful." And where two or more men wrongfullyagree
among themselves,either for the purpose of creatingsympathyin
a threatenedstrike,or for any otherpurpose,to cause trainscarrying mail or interstatecommerceto be stopped,or to [cause employers to] dischargetheiremployeesor refuse to employnew men, so
as to stop such trains,theyare guiltyof conspiracy. Further,the
court said that "if men enter into a conspiracyto do an unlawful
thing,and, in order to accomplishtheirpurpose,advise workmento
go upon a strike,knowing that violence and wrong will be the
probable outcome, neither in law nor in morals can they escape
responsibility."Summing up the evidence,the court said it
leaves no feature of the case in doubt. The substance of it, briefly stated,
is that the defendants, in combination with the members of the American
Railway Union and others, who were prevailed upon to co-operate, were
engaged in a conspiracy in restraint or hindrance of interstate commerce
over the roads entering Chicago, and, in furtherance of their design, those
actively engaged in the strike were using threats, violence, and other unlawful means of interference with the operations of the roads; that by the

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I32

JOURNALOF POLITICAL ECONOMY

injunctionthey were commandedto desist, but, instead of respectingthe

order,theypersistedin theirpurpose,withoutessentialchange of conduct,
untilcompelledto yield to superiorforce.

By this line of reasoning,and upon this evidence,the defendants

were found guiltyof contemptin both cases, and the leaders sent
to prison. In an appeal to the Supreme Court a writ of habeas
corpus was denied withoutany reconsiderationof the scope of the
Anti-TrustAct, but on othergrounds,so thatit is not to be known
fromthis case whetherthe Supreme Court would hold labor unions
under the Act. But in other cases portionsof the opinions point
directlyto such a result,and ten years later we findthe Supreme
Court actuallyholdingtrade unions guiltyunderthe Act.
Anotherof the seriesof cases broughtagainstthe men who were
concernedin various phases of the great railwaystrikeof I894 was
thatof U. S. v. Elliott (62 F. 8oi and 64 F. 27).
It was an action
similarin purpose on the part of the United States to that taken in
the Debs case, and in fact Debs and the AmericanRailway Union
were named with Elliott and othersas defendants. This was, however,merelya suit for injunctionto restraina conspiracyto obstruct
and destroyinterstatecommercein violationof the Sherman Law,
and was notan actionto punishthe men forcontemptof court. The
troublewhich this case sought to preventthreatenedcommerceon
the roads runningout of St. Louis. It is not recorded that the
injunctiongrantedby the court in this case was violated; at least
Elliott was not later broughtinto court for contempt. From this
case the utterancemost pertinentto the present discussion of the
applicationof theAnti-TrustAct to labor organizations,and particularly to railway unions,is that a combinationof railway employees
to preventthe railroadsenteringa large city fromcarryingfreight,
passengers and mail, and to induce persons to leave the service of
such railroads,is withinthe Act of July2, 1890.
The case of Thomas v. Phelan, usually known as In re Phelan,
under Thomas v. Cincinnati,New Orleans, and Texas Pacific Railway Company (62 F. 804), presents features similar to both of
the preceding cases. Phelan incited railway employees to strike
in and around Cincinnatiat the same time that they were striking
in Chicago and St. Louis, and for the same purpose. He was
cited for contempt,because his actions resulted in interference
withthe conductof interstatetraffic
by a receiver,Mr. S. M. Felton,
appointed for this railroad by the court in a case broughtagainst

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NOTES

I33

the road by Thomas. An injunctionalso was soughtagainst Phelan,

to keep him fromfurthereffortsto tie up the road. The outcome
of thecase was Phelan's punishmentforcontempt,
the sentencebeing
six monthsin jail. An injunctionwas not necessary,since further
agitationon his part would onlyhave renderedhim liable to further
imprisonment;for all interferenceswith a receiverappointedby a
court, just as all violations of the court's injunction,constitute
actions in contemptof that court. The general point to be gained
fromthis case is similarto those of the othersjust cited,with the
introductionof an additionalconsideration,that of wages. A combinationto inciteall railwayemployeessuddenlyto leave theirwork,
with no trouble over terms,in order to starve the railway companies and the public into compellingan owner of cars on the road
(i. e., the Pullman Company) to pay his employeesmore wages,
theyhavingno rightso to compelhim,is an unlawfulconspiracyin
restraintof commercewithinthe Act of July2, i890. That is, a
sympatheticstrike by one group of laborers, for the purpose of
forcingup the wages of anothergroup, where interstatecarriers
are affected,is a violationof the Anti-TrustLaw.
On JulyI3, 1894, a grand jury was assembledin San Francisco,
where the Southern Pacific Railway terminates,to investigatethe
tyingup of thatsystemby the action of strikersin regardto the use
of Pullman cars. In chargingthe jury (62 F. 840) Judge Morrow,
of the NorthernDistrictof California,said in effectthat any combination preventingby violence and intimidationthe passage of
railway trains engaged in interstatecommerceis in violation of
An agreement between two or more
the act of July 2, i890.
personsthatthe employeesof railroadscarryingmails and interstate
commerceshould quit, and that all others should, by threatsand
violence,be preventedfromtakingtheirplaces,constitutesa criminal
conspiracyto obstructthe mails and interstatecommerce. Essentially these same rulings are found also in the case of U. S. v.
Cassidy, decided the followingyear (i895, 67 F. 698). This is
anotherPullman strikecase, in whichthe Anti-TrustAct is applied
to the criminaloffenseof conspiracyto stop the mails and obstruct
interstatecommerce.
This group of Pullman strikedecisions has to do not with the
original strike which started the trouble-the strike of employees
at the Pullman works-but with a numberof sympatheticstrikes
conductedby the AmericanRailway Union and several of its locals.

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JOURNAL OF POLITICAL

ECONOMY

It is furtherto be noted thatthe main purpose of the agitatorsand

strikerswas not to tie up interstatecommerce,but was primarily
to forcethe Pullman Companyto pay its employeesa higherwage.
In the pursuit of this end, the methods of "business unionism"
demandedthe institution
of a boycottagainst the Pullman Company,
which derived a great revenue from rentingits cars to railroads.
One of the most effectivephases of the boycott,then, was the
attemptto preventthe use of Pullman cars anywhere. Those roads
which, like the Great Northern,ran their own sleeping-cars,or
which used those of Wagner make, were not interferedwithat all.
But plainlyenough,whateverthe purpose of the strikers,the effort
to preventthe use of Pullman cars did seriouslyaffectinterstate
commerce,and all of the lower courtsagreed thatthis was a violation of the Sherman Act. The findingin the only case which
reached the Supreme Court was affirmed,withoutfinallysettling
at this time the scope of the act as regards labor unions,upon the
narrower ground that the action of the strikersinterferedwith
United States mails.
In a case against an association of coal dealers in i898 it was
held that where the alleged unlawful combinationconsists of an
that the association, tounincorporatedassociation, it is sufficient
a
number
of
its
gether with large
members,as individuals and
the
are
made
defendants (U. S. v. Coal
officersof
association,
F.
As a labor union is of
Dealers' Association, i898, 85
252).
course an unincorporatedassociation,this decision applies as well
to a labor organization. Yet every memberof an illegal combination is liable for the injuryresultingto the business or propertyof
a plaintiffby reason of such combination(Atlanta v. Chattanooga
Foundry Co., 1903, I27 F. 23). It will be remembered,however,
that a strike or a strikingcombinationis not illegal under the
Sherman Anti-Trust Act unless affecting interstate commerce
(Loewe v. Lawlor, i906, 148 F. 924).
This principleexplains the
factthatmostlabor organizationsto whichthisAct has been applied
are connectedwiththe businessof transportation.
Recently the courts have shown a tendencyto become more
strictand more sweepingin applyingthe act to labor organizations.
The United States CircuitCourtin Ohio in 1907 said thata demand
by laborersfora "closed shop," or theirdemandthatno personnot a
memberof theirunion shouldbe employedin the shop,was contrary
to public policy (A. R. Barnes & Co. v. Berry, I907, 156 F. 62);

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NOTES

I35

and now the general attitudeseems to be, as statedby the Supreme

Court in a i908 case about to be treated (cf. also Northern
SecuritiesCo. v. U. S., 1904, 193 U. S. 311), that any combination
whateverto secureactionwhichobstructsthe freeflowof commerce
betweenthe states,or restricts,in that regard,the libertyof a firm
to engage in business, is in violation of the act of July 2, i890
(the Sherman Act).
The case of Loewe v. Lawlor, popularlyknown as the Danbury
Hatters' case, is one of the most famouscases in whichlabor unions
were broughtwithinthe scope of the ShermanLaw. Loewe & Co.,
of hats in Danbury,Conn.,had most of theirpatronmanufacturers
age in other states. The men employedin the Loewe shops attemptedto have theirunion recognizedby the Loewe company; to
force the Loewes to adopt a "closed-shop" policy; to gain a voice
in the conduct of the business,and to force the use of the union
label on all Loewe hats. The troublewas of several years' duration
(see Loewe v. Lawlor, 1904, 130 F. 633; 1905, 142 F. 2i6), the
refusal of the Loewe company to accede to the demands of the
union resultingin the declarationof a boycottagainst the company
and its output of hats, in 1902, by the United Hatters of North
America, a national union affiliatedwith the American Federation
of Labor, and assisted by the Federation on this occasion. In the
prosecutionof this boycottthe unionistswent to some lengthsto
destroythe trade of the Loewe company. The companysought an
injunctionrestrainingthe Hatters frominterferingwith theirbusiness; and beforelong the case resolveditselfinto an attempton the
part of the Loewes to gain protectionthroughthe Anti-TrustAct,
and to hold Lawlor and othersliable, under that Act, as unionists,
with interstatecommerce.
interfering
The finaldecisionof the DanburyHatters' case was given in the
Supreme Court,February3, i908 (208 U. S. 274). The courtwas
quite emphaticin its applicationof theAnti-TrustLaw. Concerning
the status of individuals restraininginterstatecommerce,and the
point of view to be taken toward a series of restrainingacts, the
court repeated a statementit had made two years before in the
case of Swft v. U. S. (1905; i96 U. S. 375). It applies generally.
It is that a combinationmay be in restraintof interstatetrade and
withinthe meaningof the Act of July2, i89o, althoughthe persons
exercisingthe restraintmay not themselvesbe engaged in interstate
commerce;and some of the means employedmay be acts withina

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JOURNAL OF POLITICAL

ECONOMY

state, and individuallybeyond the scope of federal authority,and

operatingto destroyintrastateas well as interstatetrade; but the
acts must be considered as a whole, and if the purposes are to
preventinterstatetransportationthe plan is open to condemnation
undertheAnti-TrustAct. The court furtherruled,in a way which
applies very definitelyto labor organizations,especiallyin view of
theirmodernmethodsof seekingtheirends, that a combinationof
labor organizationsand the membersthereof,to compel a manufacturerwhose goods are almost entirelysold in other states, to
unionizehis shops,and on his refusal to do so to boycotthis goods
and preventtheirsale in states otherthan his own until such time
as the resultingdamage forceshim to complywith theirdemands,
is, under the conditionsof this case, a combinationin restraintof
interstatetrade or commercewithinthe meaning of the Sherman
Act, and the manufacturermay maintain an action for damages
under sectionseven of the Act.
The Anti-TrustAct makes no distinctionbetween classes of
persons. Organizationsof farmersand laborerswere not exempted
the effortswhich the records
from its operation,notwithstanding
of Congress show were made in that direction. Indeed, this inclusion was intentional. After calling attentionto these facts,the
Supreme Court went furtherin the Hatters' case, perhaps, than
ever before,regardingthe breadthof applicationof this law. The
courts,it should be noted,have clearlyshown an inclinationto cling
to the notion that the Anti-TrustLaw consists substantiallyof a
specificapplicationof the commonlaw and does not go muchfarther.
It may also be noted that actual developmentsin litigationunder
the Act have seemed to go farther,and to possess more severe
possibilities,than the courts had admittedbeing aware of. But in
a portionof the opinionin the Hatters' case we findone exception
to the studied conservativeattitudepreviouslynoticed. Here the
courtallows its writtenwords to coincidewiththe facts,as regards
the practical workingsof the law, as shown by the collectionof
various earliercases decided under the Sherman Law, when it says
that this Act has a broader application than the prohibitionof
restraintsof trade unlawful at common law (Loewe v. Lawlor,
of thisassertion,
the court
In explanation
i908, 208 U. S. 274).
says also that the Act prohibitsany obstructionwhich essentially
obstructsthe freeflowof commercebetweenthe states,or restricts,
in that regard, the libertyof a trader to engage in business; and

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NOTES

I37

this includes restrictionsof trade aimed at compellingthirdparties

and strangersinvoluntarily
not to engage in the course of interstate
trade except on conditions that the combination imposes. Of
course it is seen at a glance thatthis statementby the court is very
general; but it is importantto us here in this connectionbecause it
was firstutteredin, and called forthby, a labor case under the
Sherman Law; and because, by reason of its very generality,it
makes this law so readily applicable to almost any union labor
movement,large or small.
It has been notedthat,althoughthe courtshave not yet declared
a trade union, as such, to be a trust,it would be only a shortstep
to the adoptionof that attitude. Pertinentin this connectionis the
decision, given November 20, i909, in the United States Circuit
Court for the easterndistrictof Missouri,against the Standard Oil
Company. In the decision Judge Sanborn emphasizes what has
alreadybeen statedmanytimesin cases under the Anti-TrustLaw.
"If the necessary effectof a contract,combination,or conspiracy
is to stifle,or directlyand substantiallyto restrictfree competition
in commerceamong the states or with foreignnations,it is a contract,combinationor conspiracyin restraintof that trade, and it
violatesthislaw." Then he adds "And the power to restrictcompetitionin interstateand internationalcommercevested in a person
or in an associationof personsby a contractor combinationis indicativeof its character,forit is to the interestof the partiesthatsuch
a power should be exercisedand the presumptionis that it will be."
Judge Hook, in a concurringopinion, furtheremphasizes the idea
that anythingwhich preventsnaturally competitiveorganizations
fromcompetingis in violation of the Sherman Act. In view of
these declarationsin the Standard Oil Decision, so recentlypublishedthroughoutthe country,the questionhas been raised whether
of
a labor union as such does not actuallycome withinthe definition
combinationsinherently
illegal. Whetherit does or does not seems
to depend partlyupon whetherthe courtswill hold that an attempt
to create a monopolyof labor in any trade or group of trades is an
attemptto monopolizeany part of interstatecommerce,and more
particularlyon whether the Supreme Court will affirmthat the
possessionof the power to restraininterstatecommerce(which undoubtedlyrests to some degree in every person and organization
connectedwith the industriallife of our country) is indicativeof
the exercise of that power, or, in other words, that the possession

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of such power points to the presumptionthat it will be exercised.

The indicationsare that the Supreme Court will not soon go to
such an extreme. Meanwhile the labor union, as such, is not in
violationof the Anti-TrustLaw.
In summary,threefactsare to be notedin regardto the relations
of the labor unions and the federalAnti-TrustLaw. First,nothing
in these cases indicatesthat the union itselfis illegal,but the inference is that throughthe union organizationand agencies a conspiracy or an action in restraintof trade can readily be fostered.
Second, in the applicationof the Sherman Anti-TrustAct to labor
unions in the two groups of enterprises,manufacturingand transportation-productive and distributive-the courts have made it
applicable to any union, whether intrastateor interstate,which
directlyand specificallyaffectsinterstatecommerceto restrainit.
Third, the logical and consistentholding,by the courts,to the general principlesof interpretation
of the Sherman Act, already outlined,allowed of no otherresultin theselabor cases.
C. J. PRIMM
THE

UNIVERSITY

OF CHICAGO

WASHINGTON

NOTES

THE NEW RAILROADPROGRAMME

CONTROLOF CAPITALIZATION,
ETC.
FEDERALINCORPORATION
READJUSTINGCIRCULATIONTAXES
PUBLIC LAND LEGISLATION
A STUDY OF NATIONALBANKS

The firstpositive indication of the economic policy of President

Taft has been given in a special

message

to Congress,

under date

of January 7, in which are discussed the questions of railroad

controland federal incorporation(House Doc. 484, 6ist Cong., 2d
Sess.). This event is the more notable because of the failure of
the Presidentin his firstannual message, presentedat the opening
of Congress, to afforddefiniteindicationsof his ideas upon the
more controvertedissues of national politics; and because of the
subsequentdoubtand hesitationwhich,have surroundedthe development of the administration'splans. As now presented,the scheme
is of decidedly

radical

character, transcending,

in its application

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to