The Case of the Trans-Missouri Freight Association

Abstract

THE CASE OF THE TRANS-MISSOURI FREIGHT ASSOCIATION. The importance of the decision of a court of justice may depend either upon the principle in olved in the decision, or upon the practical effect of-the decision as affecting human life, liberty or property interests. The recent decision of the Supreme Court of the United States is of wide spread importance, not only by reason of the principle of law involved by the court, but because the enunciation therepf may seriously affect the value of securities of railways in the United States. This decision was rendered in the case of the Trans-Missouri Freight Association, decided on March 22, 1897. In view of its importance, and of the general. apprehension that it has caused, it may be of some value to consider carefully the decision, not only as to that which was actually decided with reference to the facts of the particular case, but also as to the principle of law, which will determine similar cases as they may arise in the future. If the principle itself be of importance, afortiom, is it so when declared by a court, the breadth of whose jurisdiction and whose personnel entitle any decision thereof tQ the utmost respect. The facts in the case are as follows: By articles of agreement, dated March 15, 1889, fifteen railroad companies, competitors for the freight traffic in that part of the United States between the Mississippi and Missouri Rivers and the Pacific Ocean, formed an association called the Trans-Missouri Freight Association. The articles of agreement provided, inter alia, that the parties thereto would establish and maintain such rates, rules, and regulations on freight traffic between competitive points as a committee of their choosing should recommend as reasonable; that these rates, rules, and regulations should be public; that there should be monthly meetings of the association composed of one representative from each railroad company; that each company should give five days' notice before each monthly meeting of every reduction of rates or deviation from the rules it should propose to make; that it

How are Price Fixing Agreements Unfair?

“…The carriers argued that the agreement was reasonable because fixed prices avoided cutthroat competition and that the public would not be prejudicated because the rates were reasonable. (Patterson 1897) On the one side, although Justice Peckham and the majority understood the argument made by defendants; they didn't accept the argument that price fixing agreements could be reasonable. The railroad argued that price-fixing was a reasonable restraint of competition if it prevented ruinous competition and its negative social effects.…”