United States v. E. C. Knight Co., 156 U.S. 1; 15 S. Ct. 249; 39 L. Ed. 325 (1895)

Facts—The government charged that the E. C. Knight Company, with four others, had contracted with the American Sugar Refining Company for the purchase by the latter of the stocks and properties of these corporations, and for the issuance of stock in the American Sugar Refining Company. It charged that this transaction was intended to bring about control of the price of sugar in the United States, together with a monopoly of the manufacture and sale of refined sugar in this country, in violation of the Sherman Antitrust Act (1890).

Question—May Congress prevent the intrastate purchase of refining compa[1]nies in order to prevent a monopoly in interstate commerce?

Decision—No.

Reasons—C.J. Fuller (8–1). The power to control manufacturing involves in a certain sense the control of its disposition, but only in a secondary sense. The exercise of that power brings the operation of commerce into play, but only indirectly. The regulation of commerce applies to subjects of commerce, not to those of internal police. The fact that an article is manufactured with an intent of export to another state does not of itself make such an article an item of interstate commerce. It becomes so when it begins its journey in interstate commerce. The act of 1890 did not attempt to deal with monopolies as such, but with conspiracies to monopolize trade among the several states. In the case at hand, the object was private gain from manufacture of the commodity, not control of interstate or foreign commerce. There was nothing in the proofs to indicate any intention to restrain trade or commerce.

J. Harlan authored a vigorous dissent indicating that he thought monopolies did obstruct interstate commerce and further arguing that this was a national problem that only the national government could adequately handle.

Note—E. C. Knight was reversed in National Labor Review Board v. Jones and Laughlin Steel Corp. (1937). Knight was the first big interpretation of the Sherman Antitrust Act. The practical effect of Knight was a legal “no man’s land”—the doctrine of “dual federalism” that was seemingly erased in United States v. F.W. Darby Lumber Co., 312 U.S. 100 (1941). but which has re-emerged in more recent cases dealing with the relationship between state and federal powers.