In the so-called Merger Case - Xorthern Securities Co. v. United States43 - the act of 1890 was held applicable to a combination of stockholders in the competing interstate railway companies, the aim, or at least the effect of which was to prevent or render possible the prevention of competition between the two roads by transferring their stock to a single holding company, organized under the laws of a State, which holding company thereby became possessed of a controlling interest in the stock of each of the railway companies.

42 193 U. S. 38; 24 Sup. Ct. Rep. 307: 48 L. ed. 608. 43 193 U. S. 197; 24 Sup. Ct. Rep. 436; 48 L. ed. 679.

In this case it was strennously urged that the combination or agreement represented by the holding company was one which, in itself, had no direct relation to interstate commerce, the company being an investment company and not itself a carrier company; and that the question thus reduced itself to whether the United States had, under its commercial power, the constitutional authority to regulate the transference and holding of the shares of stock of state corporations.44 corporation can stand in the way of the enforcement of the national will, legally expressed. . . . The federal court may not have the power to forfeit the charter of the Securities Company, it may not declare how its shares of stock may be transferred on its books, nor prohibit it from acquiring real estate, nor diminish nor increase its capital stock. All these and like matters are to be regulated by the State which created the company. But to the end that effect be given to the national will, lawfully expressed, Congress may prevent that company, in its capacity as a holding corporation and trustee, from carrying out the purposes of a combination formed in restraint of interstate commerce."

To this argument the court replied that the real question at issue was not as to the power of the United States to regulate the holding of stock of state corporations, but as to the power of state corporations to restrain or monopolize interstate commerce. It was admitted that contracts or combinations relating to the holding of stock of interstate carrier companies have not, generally speaking, a direct relation to interstate commerce, and therefore, that, as to them, the doctrine of the Knight case would apply. But in the present case the court found that the Merger Company was not a bona fide investment company, but was, in its very inception and sole design, a scheme for controlling interstate commerce. Its relation to interstate commerce was thus a direct one. The court say: " The government . . . does not contend that Congress may control the mere acquisition or the mere ownership of stock in a state corporation engaged in interstate commerce. Nor does it contend that Congress can control the organization of state corporations authorized by their charters to engage in interstate and international commerce. But it does contend that Congress may protect the freedom of interstate commerce by any means that are appropriate and that are lawful, and not prohibited by the Constitution. It does contend that no state

44 Other objections were urged which it is nut necessary here to consider.

By its decree the court thereupon enjoined the company from acquiring aditional stock, from voting that which it had already acquired, and from exercising any control over the roads, the stock of which it held.45

In result, the chief significance of the Merger case would seem to be the authority assumed by the court to look beneath the surface of acts, and, irrespective of their formal character, to hold them subject to the provisions of the Anti-Trust Act, if, thus viewed, they disclose a plan to restrain, or a capability of restraining, interstate trade.