1. Samuel Hurley
Midterm II: Essay II
Despite the overwhelming popularity of the Sherman Antitrust Act, and the general
consensus that trusts needed to be checked, the federal government was not very successful in
prosecuting violators. There were many reasons for this, however, jurisprudentially speaking,
one of the largest was the Court’s adherence to various formalist doctrines.
Given the Court’s aforesaid adherence to formalism, it is not so surprising that the more
realism-inclined Justice Oliver Wendell Holmes Jr. would be at odds with the logic undergirding
cases such as U.S. v. E.C. Knight (1895). Conversely, it is unlikely that Court would have been
very agreeable to Holmes’s “current of commerce” theory, as articulated in Swift & Co. v. United
States (1905). Regardless of any particular differences between Swift & Co. v. United States and
E.C. Knight, it seems quite likely the Court would have objected to the logic undergirding
Holmes’s declaration, “commerce among the States is not a technical legal conception.” For this
is exactly how the Court treated commerce in E.C. Knight. During this time period, the Court had
a distinctly Langdellian bent, and truly believed that overarching, universal principles could be
determined in regards to contracts, business, and commerce.
More importantly, the stream of commerce theory allowed States in which a finished
product was being sold to sue for violations. In E.C. Knight, a major reason the Court held the
trust as legal was that manufacturing was deemed to be a local concern, falling entirely within
State boundaries. Thus, it could not be considered interstate commerce, which made it entirely
outside the Commerce Clause. Because of this, the Sherman Antitrust Act could not be applied.
In Swift & Co., Holmes expanded the definition of interstate commerce to include all parts of a
change of production, when the chain of production clearly crossed state boundaries. This means
that, if the “current of commerce” theory had been formulated during the time of E.C. Knight, the

2. Court may have felt more comfortable subjecting manufacturing to more scrutiny. After all, the
trust in E.C. Knight controlled nearly all the sugar manufacturing in America, so it seems quite
likely that some part of their chain of production crossed State boundaries.
Despite the fact the Court would eventually posit this stream of commerce theory, during
the time of E.C. Knight, it would have been highly anachronistic and likely rejected. Formalism
still drew distinctions between manufacture and commerce. Without the stream of commerce
theory, these formalist convictions inevitably translated into a decision upholding the legality of
the E.C. Knight sugar trust despite its massive market share. The conceptual framework of the
time simply did not permit prosecution. Firstly, it must be remembered the rigid formalism
during this period extended beyond the manufacturing and commerce. The concept of what is
now known as “dual federalism” is another formalistic distinction regarding State and federal
jurisdiction. As mentioned above, the federal government was only permitted to regulate
interstate commerce — anything else necessarily fell into the inviolable realm of the States. This
was reflected in the politics of the day. Despite the fact the public was generally concerned about
trusts, it was assumed the onus of prosecution fell primarily on the States.
At the time, what may now appear to be naïveté was not so foolish. The States had a great
deal of power to limit trusts, and even exclude foreign trusts from their States if they truly
objected to their practices. Given the seeming consensus about the necessity of such limitations,
many believed the federal government could rest easy, and do a minimum. It would take a failure
of the States to combat trusts (indeed, by and large, they would eventually begin to assist them),
and disregard of the Sherman Antitrust Act to spur the Court into action. However, at the time of
E.C. Knight, no reconsideration of tightly held formalist ideals was felt to be necessary. In other
words, the Court’s formalism prevented them from acknowledging the real-world effects such a

3. monopoly on sugar production would entail. Or, even if they did foresee the issues that might be
created by this trust, they may have thought the States would intercede where they believed the
federal government had no right to. Predictably, the upending of such entrenched legal doctrine
would take quite awhile, and it would be some time before the Court and federal government
adjusted their policies more fully to the exigencies of industrialization.
With all this said, the Sherman Antitrust Act still stood — for the time being, the Justice
Department would just have to be more particular about which trusts they chose to prosecute.
Knowing that they could not prosecute trusts controlling what the Court defined as manufacture,
they would have to focus on those that obviously sought to impede competition through the
manipulation of the buying and selling of goods or services. One such trust was the one in
question in Addyston Pipe & Steel Co. v. United States (1899). In this case, a group of steel trusts
had divided the country into regions, and rigged the bidding process in favor of different
members for each region. Thus, the oligopoly was able to reduce production and raise prices.
Since bid rigging was a direct interference with the buying and selling of goods across state
borders, the federal government was well within their rights to prosecute under the Sherman
Antitrust Act. The Supreme Court agreed, and, in this case, chose to declare the trust illegal.
This sort of reasoning was also reflected in Standard Oil Co. of N.J. v. U.S. (1910). In
this, Standard Oil sought to suppress competition using such methods as price cutting. Their size
alone was not the issue — the problem was that they used their clout in various states to alter
markets in such a way that competition could not thrive. Many of these methods involved
interference with interstate commerce. As such, the practices could be deemed illegal as per the
Sherman Act. Standard Oil Co. of N.J. v. U.S. is also noteworthy because the Justices took time
to clearly define what constituted a “restraint of trade.” Their answer was essentially monopoly

4. and its ill effects. Economists may recognize some of the crucial ways by which they defined
monopoly: increased prices, decreased output, or a decrease in quality. In this way the Court
created a metric by which one might determine if a business constitutes a “monopoly.” It also
seems the Court may have been taking a more realism-informed opinion by taking into account
seemingly extra-legal ideas such as economic theory. The case is also noteworthy because of
how the Court creatively broke up the corporation into its constituent parts, which was quite the
innovation.
These intricacies were, of course, besides the point for the Justice Department in the
period immediately following E.C. Knight. As mentioned before, the thrust of what they knew
they had to do can be put as follows: with the Court’s separation of manufacture and commerce,
they had to find trusts which violated the Sherman Antitrust Act in a way that pertained to
commerce. This received vindication in Addyston Pipe & Steel Co., and would set the tone for
future Justice Department prosecutions for some time.
To our modern ears, the E.C. Knight decision seems almost obtuse, much in the way the
Court’s rulings on civil rights feel today. However, when one examines the judicial doctrine of
the time, and the belief the States would limit the need for the federal government’s interference,
their opinion is understandable, even prudent. Though looking back it seems that a break from
formalism was woefully needed, when time is taken to understand the Justices’ positions, their
opinions no longer seem so foolish — after all, today citizens hold onto certain abstractions with
equal tenacity.