Name Date Class Supreme Court Case Study 12
Government’s Role in Interstate Commerce
United States v. E.C. Knight Co., 1895
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Background of the Case
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Toward the end of the 19th century, a few large companies came to dominate major
industries in the United States. These companies, called “trusts,” tended to reduce
competition, which in turn harmed consumers by causing price increases.
To reverse this trend, Congress passed the Sherman Anti-Trust Act in 1890. Its authority
was based on Article I, Section 8 of the U.S. Constitution, which gives Congress the power to
regulate interstate commerce. The Act declared “every contract, combination . . . or conspiracy,
in restraint of trade or commerce among the several States, or with foreign nations” to be
illegal. Violation of the Act was punishable by fines and imprisonment.
The American Sugar Refining Company was based in New Jersey. In 1892, it purchased the
E.C. Knight Company and three similar businesses in Philadelphia. After these purchases,
American Sugar Refining produced 98 percent of all refined sugar in the United States. The
federal government sued American Sugar Refining and the sugar companies it had acquired,
claiming that the purchases were a violation of the Sherman Anti-Trust Act. In 1894, the case
was argued before the Supreme Court.
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C
onstitutional Issue
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The United States government argued that the purchase of sugar refineries was a
violation of the Sherman Anti-Trust Act.
“Commerce” refers to the sale, exchange, or purchase of goods, while “manufacturing”
refers to the production of a product from raw materials.
The issue before the Supreme Court was whether the Sherman Anti-Trust Act was
constitutional. Had Congress stepped beyond the limits of its power in regulating interstate
trade and commerce?
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The Supreme Court’s Decision ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★
The Supreme Court decided in favor of the sugar companies by a vote of 8 to 1. Chief
Justice Melville W. Fuller wrote the Court’s opinion.
The Court found that the Sherman Anti-Trust Act was indeed constitutional. In addition,
Fuller wrote that the American Sugar Refining Company had “acquired nearly complete
control of the manufacture of refined sugar within the United States.” However, the Court also
held that manufacturing or refining sugar did not in itself represent “commerce.” The exchange
of goods that makes up commerce is a separate process that follows manufacturing, and is not
a direct part of it. Therefore, the Sherman Anti-Trust Act did not apply to American Sugar
Refining Company’s purchase of four sugar companies.
(continued)
Supreme Court Case Studies
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Name Supreme Court Case Study 12
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Date Class (continued)
Dissenting Opinion
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Justice John Harlan dissented. He wrote that “while the opinion of the court in this case
does not declare the Act of 1890 to be unconstitutional, it defeats the main object for which it
was passed.” Harlan asserted that only a “national power” could protect the public from the
actions of the trusts. He further stated that that the majority opinion left the public at the
mercy of business interests.
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Supreme Court Case Studies