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Published online by Cambridge University Press: 05 August 2009
The “rule of reason” remains after almost forty years the most curious obiter dictum ever indulged in by the Supreme Court of the United States. Mistaken though it was in its basic assumptions, the rule nevertheless persists as the Court's standard for construing the Sherman Act. This is not to say, as some critics have said, that the rule has seriously hampered the Department of Justice in enforcing the antitrust laws. We have it on the authority of Thurman Arnold that without the rule die Sherman Act would be “unworkable … because every combination between two men in business is in some measure a restraint of trade.” The rule, he has said, “has the effect of preventing the antitrust laws from destroying the efficiency of diose combinations that are actually serving, instead of exploiting, the consumer.” The fact remains, however, that in adopting the rule the Court erred in at least two respects: first, in applying a test of reasonableness where in the early cases at least none was called for and, second, in basing that rule on a misunderstanding of the common law. For the first of its sins the Court has been scolded many times; for the second, it has received surprisingly litde criticism.
1 The Bottlenecks of Business (New York, 1940) pp. 125–126, 131Google Scholar. See also his “Antitrust Law Enforcement, Past and Future,” 7 Law and Contemporary Problems 5–23 at 14 (Winter, 1940Google Scholar) and the Annual Report of the Attorney General of the U. S., 1939, p. 39.Google Scholar
2 26Stat. 209 (1890).Google Scholar
3 21Congressional Record (pt. 4) 3146 (April 8, 1890).Google Scholar
4 Taft, William H., The Anti-Trust Act and the Supreme Court (New York, 1914) p. 21.Google Scholar
5 Ibid., pp. 5–10.
6 Ibid., pp. 15, 20–21. See also “The Rule of Reason in Loose-Knit Combinations,” Columbia Law Review 295–297 (02, 1932).Google Scholar
7 Umbreit, Kenneth B., Our Eleven Chief Justices (New York, 1938) pp. 367–8.Google Scholar
8 U. S. v. Trans-Missouri Freight Association, 166 U. S. 290.
9 U. S. v. E. C. Knight Co., 156 U. S. 1 (1895).
10 166 U. S. 290 at 329, 340.
11 See Corwin, Edward S., “The Anti-Trust Acts and the Constitution,” 18 Virginia Lav Review 363–4 (1932).Google Scholar
12 166 U. S. 290 at 344.
13 166 U. S. 290 at 332, 333.
14 166 U. S. 290 at 344.
15 166 U. S. 290 at 351. Italics mine.
16 166 U. S. 290 at 354.
17 171 U. S. 505 at 565 (1898).
18 171 U. S. 505 at 573.
19 171 U. S. 505 at 528.
20 171 U. S. 505 at 574.
21 171 U. S. 505 at 568.
22 Addyston Pipe & Steel Co. v. U. S., 175 U. S. 211 (1899).Google Scholar
23 175 U. S. 211 at 228.
24 Northern Securities Co. v. U. S., 193 U. S., 197 at 331 1904. Italics are the Court's.
25 193 U. S. 197 at 361.
26 193 U. S. 197 at 386.
27 193 U. S. 197 at 405.
28 Umbreit, , op. cit., p. 365.Google Scholar
29 U. S. v. Addyston Pipe & Steel Co., 85 F. 271 (C. C. A. 6th, 1898).
30 Walker, Albert H., “The ‘Unreasonable’ Obiter Dicta of Chief Justice White in the Standard Oil Case” (privately published, 1911), pp. 10–13.Google Scholar
31 Standard Oil Co. v. U. S., 221 U. S. 1 at 59–60, 66.
32 221 U. S. 1 at 64–66.
33 Davis, John W., “Edward Douglass White,” 7 American Bar Association Journal 377 at 381 (08, 1921).Google Scholar
34 221 U. S. 1 at 80.
35 221 U. S. 1 at 83. Italics Harlan's.
36 U. S. v. American Tobacco Co., 221 U. S. 106 at 187.
37 221 U. S. 106 at 190.
38 221 U. S. 106 at 191–192, 193. Italics Harlan's.
39 See U. S. v. United Shoe Machinery Co., 247 U. S. 32 (1918); U. S. v. United States Steel Corp., 251 U. S. 417 (1920); U. S. v. International Harvester Co., 274 U. S. 693 (1927).
