1. United States v. E.C. Knight & Co., (1895)
2. Facts: Knight acquired the stock of several other sugar manufacturing companies, to control about 98% of the nation’s sugar refining capacity.
3. Procedural Posture: The government brought a civil action under the Sherman Act, which provided for penalties for “restraint of trade or commerce among the several states,” to set aside the acquisition. The lower court dismissed the action, and the government appealed to the Supreme Court.
4. Issue: Whether Congress had the power, under the commerce clause, to regulate the monopolization of the means of manufacturing a good.
5. Holding: No.
6. ∏ Argument: A monopoly of manufacture restrains the free trade or commerce among the states, and thus is contrary to the Sherman Act. Congress has the power to regulate the monopolization of manufacture because it restrains free trade among the states.
7. ∆ Argument: A monopolization of manufacture is not possible. Even if it were, such power to control it would necessarily extend to all use of raw materials, and thus is beyond what the Sherman Act contemplates.
8. Majority Reasoning: If monopolization of manufacture could exist, it could only have an indirect effect on interstate commerce. There is a difference between “manufacture” and “commerce”, namely that commerce succeeds manufacture. Thus, controlling manufacture only indirectly controls commerce. Congress does not have the power to control manufacture because that would be too intrusive a power, necessarily applying to all production of raw materials that could be manufactured into a higher product and then subject to commercial interstate transactions. Allowing the power to be construed this broadly would leave no powers for the states to exercise pursuant to the tenth amendment. All local commerce would then be subject to federal control. Thus, the distinction must be made between activities that have a “direct” affect on commerce, which Congress can control, and those which have merely and “indirect” or incidental affect on commerce, which the states are left to control.
