United States V. E. C. Knight Co. Case Study
United States v. E.C. Knight Co.
Background: Decided in 1895 with a 8-1 vote. Six companies dominated the North American sugar refining industry: American Sugar Refining Co. and four Pennsylvania refineries who together, made up 98% of the refined sugar manufactured. A lone Boston company held the remaining 2%. The United States sued using its newly passed Sherman Anti-Trust Act (passed in 1890) declaring any attempt to monopolize trade or commerce to be illegal. This case marks the Sherman Anti-Trust Act’s first test of Constitutionality against E.C. Knight Co., who, in control of over 98% of sugar refining in the United States has a monopoly on the manufacturing aspect, but does the Sherman Anti-Trust act include manufacturers?
Questions:(1)
Is manufacturing considered commerce, and if so, is it subject to government regulation? (2) “Did Congress exceed its constitutional authority under the Commerce Clause when it enacted the Sherman Anti-Trust Act?” (Oyez)
Legal Holdings: (1) No, manufacturing is not considered commerce. The fact that an article is manufactured for export to another State does not of itself make it an article of interstate commerce" (United States v. E.C. Knight Co. 425). It was established in Coe v. Errol (1886), that the beginning of interstate commerce is when the item goes from its residing state to the state of which is its destination. (2) Yes, the Sherman Anti-Trust Act is constitutional, it just is not applicable to this case. The Sherman Anti-Trust Act was created to outlaw any attempts to monopolize commerce. In this case, however, the manufacturing aspect is not considered commerce. Thus, the monopoly was legitimate and perfectly legal (at the time). The United States position proved to be incorrect. This case led to the court establishing the “Direct vs Indirect test”. In this particular case the court decided that the trust involving E,C. Knight Co. affected commerce indirectly. The direct and indirect test simply means that Congress only has the power to regulate things that directly affect commerce.
Take home point: This case is important due to its establishment of the direct vs indirect test. This test is instrumental to many cases in helping identify if the case is considered interstate commerce or not. This case specifically shows that the law was passed to stop monopolizing in commerce which would lead to individuals dictating the entire market in whatever they have cornered for personal gain at the expense of the consumer. With the market cornered, it is impossible to compete with the trust by other smaller companies. The Supreme Court did not count monopolies in the earlier steps of production, which also have influences on price and availability of goods and services.
Works Cited. Epstein, Lee, and Thomas G. Walker. Constitutional law for a changing America. Sage, 2017.
Joshua Johnson, “The Commerce Power.” 8 Oct. 2017.
"United States v. E. C. Knight Company." Oyez, 8 Nov. 2017,
www.oyez.org/cases/1850-1900/156us1.
Background: Decided in 1895 with a 8-1 vote. Six companies dominated the North American sugar refining industry: American Sugar Refining Co. and four Pennsylvania refineries who together, made up 98% of the refined sugar manufactured. A lone Boston company held the remaining 2%. The United States sued using its newly passed Sherman Anti-Trust Act (passed in 1890) declaring any attempt to monopolize trade or commerce to be illegal. This case marks the Sherman Anti-Trust Act’s first test of Constitutionality against E.C. Knight Co., who, in control of over 98% of sugar refining in the United States has a monopoly on the manufacturing aspect, but does the Sherman Anti-Trust act include manufacturers?
Questions:(1)
Is manufacturing considered commerce, and if so, is it subject to government regulation? (2) “Did Congress exceed its constitutional authority under the Commerce Clause when it enacted the Sherman Anti-Trust Act?” (Oyez)
Legal Holdings: (1) No, manufacturing is not considered commerce. The fact that an article is manufactured for export to another State does not of itself make it an article of interstate commerce" (United States v. E.C. Knight Co. 425). It was established in Coe v. Errol (1886), that the beginning of interstate commerce is when the item goes from its residing state to the state of which is its destination. (2) Yes, the Sherman Anti-Trust Act is constitutional, it just is not applicable to this case. The Sherman Anti-Trust Act was created to outlaw any attempts to monopolize commerce. In this case, however, the manufacturing aspect is not considered commerce. Thus, the monopoly was legitimate and perfectly legal (at the time). The United States position proved to be incorrect. This case led to the court establishing the “Direct vs Indirect test”. In this particular case the court decided that the trust involving E,C. Knight Co. affected commerce indirectly. The direct and indirect test simply means that Congress only has the power to regulate things that directly affect commerce.
Take home point: This case is important due to its establishment of the direct vs indirect test. This test is instrumental to many cases in helping identify if the case is considered interstate commerce or not. This case specifically shows that the law was passed to stop monopolizing in commerce which would lead to individuals dictating the entire market in whatever they have cornered for personal gain at the expense of the consumer. With the market cornered, it is impossible to compete with the trust by other smaller companies. The Supreme Court did not count monopolies in the earlier steps of production, which also have influences on price and availability of goods and services.
Works Cited. Epstein, Lee, and Thomas G. Walker. Constitutional law for a changing America. Sage, 2017.
Joshua Johnson, “The Commerce Power.” 8 Oct. 2017.
"United States v. E. C. Knight Company." Oyez, 8 Nov. 2017,
www.oyez.org/cases/1850-1900/156us1.