Hence threats of associations of traders (retailers or wholesalers) not to deal with another if he continued to deal with some third party have been declared acts in restraint of trade.[6] Yet in the case cited the court seemed to have been more concerned with protecting “the individual against encroachment upon his rights by a greater power,” “one of the most sacred duties of the courts,” than with rights and interests of the general public, endangered by such restraint of trade.

Sec. 6. #Competition sometimes favored regardless of results.# In another respect the courts have wavered in their attitude toward competition, the general doctrine being that competition, particularly the cutting of prices, is absolutely justifiable, regardless of circumstances.  In the leading English case[7] the facts were that the larger steamship companies sent to Hankow additional ships, now called, figuratively, “fighting ships,” to “smash” freights in order to ruin tramp steamship owners and drive them out of the field.  The court held that this constituted no legal wrong to the tramp steamship owners, and scouted the idea of the court’s looking at the motives in price cutting, or taking into consideration in any way what the court called “some imaginary normal standard of freights and prices.”  And of this case the lawyer is forced to say:  “Undoubtedly the excellent opinion just quoted represents the law everywhere,” even tho there are other cases difficult to harmonize with it.[8]

To the economist, not bound in like manner by legal precedent, such a verdict was from the first impossible.  The court appears to have considered that only the rights of the private litigants, the tramp steamship owners, were involved, not the rights and interests of the shipping public; it considered the immediate and not the ultimate effects of the “smashing” of rates; it allowed itself to be deceived by the appearance of acts that in outer form were competition, but that had as their purpose the strengthening and maintenance of monopoly.  These acts are forms of the “unfair” practices that will be mentioned later.[9]

Sec. 7. #Increasing regard for results of competition.# Despite the binding precedents, the courts in some later decisions have refused to look upon competition as good regardless of its motives and of its consequences.  In a federal case[10] the judge, in a brief and acute dictum, recognized the evil of a rate war that would result from threats of definite cuts.  They impair “the usefulness of the railroads themselves, and cause great public and private loss.”  The court’s opinion was no doubt largely influenced by the fact that railroad rates were already subject to regulation:  “Every precaution has been taken by state legislatures and by the congress to keep them just and reasonable,—­just and reasonable for the public and for the carriers.”