Full opinion text
MAJOR, Circuit Judge. These are several appeals from judgments of conviction by the District Court for the Western District of Wisconsin for violation of Section 1 of the Sherman Anti-Trust Act (Act of July 2, 1890, 26 Stat. 209, 15 U.S.C.A. § 1). Appellants are twelve corporations and five of their officers and employees. The indictment was returned on December 22, 1936, against twenty-four corporations engaged in the petroleum business (called “defendant major oil companies”), three trade journals, and fifty-six individuals, principally officers and employees of the defendant corporations. On October 4, 1937, twenty-three of the corporations, the three trade journals and forty-six individuals were brought to trial, which continued over three and one-half months before a jury. At the close of its case, the Government dismissed the indictment as against four major companies, the three trade journals and one individual. .The court, at the same time, directed verdicts for three corporations and four of their officers and employees. During the course of the trial the court granted motions for directed verdicts, on behalf of eleven other individual defendants. The jury on the 22nd day of January, 1938, returned verdicts of guilty against the remaining sixteen corporations and thirty individuals. On July 19, 1938, the trial court set aside the verdicts and dismissed the indictment as to ten of the convicted individuals and one of the convicted corporations. The court also granted new trials to fifteen individuals and three corporations, and sustained the verdicts of the jury against the remaining twelve corporations and five individuals, appellants herein. The Indictment. The indictment describes the states of Michigan, Wisconsin, Minnesota, North Dakota, South Dakota, Iowa, Illinois, Indiana, Missouri and Kansas as the market territory of defendant Standard of Indiana, sometimes known as the “Standard of Indiana Territory” by reason of said defendants’ dominant position in the distribution of gasoline in each of said states. The territory is also described as the Mid-Western area. Each of the defendant major oil companies, so it is alleged, either directly or through subsidiary or affiliated companies markets gasoline in some or all of the states of such area. It is charged that the defendant companies manufacture and distribute to jobbers, dealers and consumers more than 85% of all the gasoline sold therein. It is alleged that the jobbers therein, some 4000 or more, sell more than 50% of all the gasoline sold to retail service stations and that the defendant companies supply more than 80% of the gasoline purchased by those jobbers. During the period of the conspiracy and for many years prior thereto, jobbers purchased gasoline from the defendant companies under long-term supply contracts, which uniformly provided that the price of the gasoline purchased by the jobbers should be determined by the “spot” market prices as published by two trade journals, namely, The Chicago Journal of Commerce, published in Chicago, Illinois, and Platt’s Oilgram, published in Cleveland, Ohio. It is alleged that the defendant companies also distribute gasoline through retail dealers and directly to consumers through their own retail service stations, and that retail prices in the Mid-Western area are directly and substantially influenced by, and fluctuate directly with, the “spot” market price. The indictment alleges that the defendant companies do not sell any substantial part of their gasoline on the “spot” markets. Independent refiners, located in the Mid-Continent and East Texas oil fields, sell most of the gasoline sold on a “spot” basis and the prices received therefor make the “spot” market quotations which are published each day in the market journals. It is alleged that this gasoline amounts to less than 5% of all the gasoline marketed in the Mid-Western area. It is alleged that, beginning in the month of February, 1935, and continuing to the date of the presentation of the indictment, the defendants combined and conspired together for the purpose of artificially raising and fixing the tank-car prices of gasoline in the "spot” markets, and artificially raised and fixed said “spot” market tank-car prices of gasoline, and maintained said prices at artificially high and noncompetitive levels and thereby increased and fixed the tank-car prices of gasoline in the Mid-Western area (including the western district of Wisconsin) and arbitrarily, by reason of the provisions of the jobber contracts, exacted large sums of money from jobbers with whom such contracts were made. Thus, the defendants are charged with an unlawful combination and conspiracy in restraint of trade and commerce in gasoline in violation of the Sherman Anti-Trust Act. Then follows the manner and means by which the conspiracy was effectuated. It is alleged that, beginning in the month of February, 1935, the defendants engaged and participated in two concerted gasoline buying programs, described as the East Texas and Mid-Continent buying programs, for the purchase by them of large quantities of gasoline from independent refiners in the East Texas and Mid-Continent fields. The independent refiners selling in the programs are named as co-conspirators, but not as defendants. The substance of the buying programs, as alleged, is that the defendants by their agents and representatives, purchased large quantities of gasoline in accordance with allocations made to the various major companies and that such purchases amounted to nearly 50% of all the gasoline sold by said independent refiners; that such purchases were in excess of the amounts which the defendant companies would have purchased apart from their participation in said buying program, and that said purchases were made at uniformly high, arbitrary and non-competitive prices for the unlawful purpose of increasing the “spot” tank-car price. It is also alleged that the independent refiners, at the instigation of the defendants, curtailed their production of gasoline. Then follows a paragraph with reference to the “participation of market journals.” It is alleged that such journals (theretofore named), together with certain of their officers, participated in the combination and conspiracy, and aided the other defendants in effectuating the same. The market journals are described as “the chief agencies and instrumentalities through which the wrongfully and artificially raised and fixed prices for gasoline paid by the major oil companies have affected the prices paid by jobbers, retail dealers and consumers for gasoline in the Mid-Western area.” It is alleged that the quoted price published in said market journals was represented to be the price prevailing in “spot” sales to jobbers in tank-car lots when, as a matter of fact, the quotations thus published were the artificially raised and fixed prices paid by the defendant companies in the buying programs. The indictment then concludes with* a paragraph entitled “Jurisdiction and Venue” wherein it is alleged that the defendant companies sold large quantities of gasoline in tank-car lots to jobbers within the western district of Wisconsin at the artificially raised and fixed and non-competitive prices, and that retail dealers and consumers in said district have been required to pay artificially increased prices for gasoline by reason of the combination and conspiracy and pursuant to the purposes and ultimate objectives thereof. Statement of Facts. The record, as might be expected, is voluminous, and we find it difficult to compress the relevant facts in an opinion of reasonable length. The difficulty is increased by the widely disagreeing views of the respective parties as to what the essential facts are. At this point we shall only undertake to review what seem to be the more salient, leaving to a subsequent time facts material in connection with the numerous questions which are presented. This case is concerned primarily with the marketing of gasoline in the Mid-Western area. (Indictment territory.) In normal times this area is supplied chiefly with gasoline refined from crude oil produced in the Mid-Continent oil fields. Over 21% of all the gasoline sold in the United States in 1935, amounting to almost five billion gallons, and over 25% in 1936, amounting to nearly five and one-half billion gallons, was sold in this territory. The oil industry has four primary functions: (1) Producing crude oil from the earth; (2) transporting it to refineries; (3) refining it into commercial products and (4) marketing the products. In the marketing process there are usually three units: the refiner, the j obber and the dealer. The refiner produces the gasoline; the jobber purchases it from the refiner in tank-car lots, stores it in bulk storage plants and resells it to the dealer in tank-wagon lots. A major oil company is one engaged in all branches of the industry. It produces and stores substantial amounts of crude oil, refines a substantial part of the gasoline which it sells, and owns large amounts of gasoline storage capacity at the refinery. Tt operates bulk storage plants in the marketing area from which gasoline can be distributed by tank-wagons to retailers. In most instances it operates service stations where its product is sold at retail. Most o-f the corporate defendants in this case are major oil companies. An independent refiner, as described in the indictment, is one engaged largely in the business of refining, usually has few, if any, bulk storage plants, and seldom operates service stations. The independent refiners far exceed the major companies in number, but their business is comparatively small. Some eighteen major companies sell about 85% of the gasoline consumed in the Mid-Western area, while some seventy independent refiners sell only 15%. Appellants marketed about 54% of the gasoline sold in this territory in 1935. Over 25%. was sold- by Texas, by Standard of Indiana, and Barnsdall. A jobber is a “middle man” who purchases gasoline in tank-car lots, generally from refiners, and owns storage or bulk plants from which he delivers gasoline in tank-wagons or trucks to service stations or directly to large consumers. In 1935 and 1936 there were more than 4000 jobbers doing business in the Mid-Western area. At the time the indictment was returned and for many years prior thereto, most jobbers purchased their gasoline in tank-car lots under contracts in which they agreed to purchase, generally for a period of one year, all their gasoline requirements from a single refinery. The defendants prescribed the form of contract made by jobbers purchasing from them. These contracts varied somewhat in form, but generally the price to be paid by virtue of the contracts was upon the basis of what was known as “spot market quotations” appearing daily in one or both of the two defendant trade journals. The price was determined by averaging the high and low “spot” market quotations as they appeared therein. The contracts usually recognized the Standard of Indiana as the market leader in the territory and contained a provision to the effect that the buyer was to have a margin of 5Yz4 per gallon under the service station price as posted by that company. The retail service station prices posted by that company were also followed by jobbers, refiners and retailers. The selling price fixed by that company, as well as by all others, bore a direct relation to the “spot” market quotations during the indictment period. The normal retail price was usually 5%<í per gallon more than the “spot” market price. The daily “spot” market is determined by sales for that day in private transactions at refineries in the field. The principal part of the gasoline on such market is sola by the independent refiners and constitutes from 5% to 7%% of all gasoline sold in the Mid-Western area. The major companies, by reason of storage facilities and their own means of disposing of gasoline, have a more assured outlet than the independent refiners who must depend largely’ on the “spot” tank-car market. The major companies frequently were required to purchase from the independent refiners prior to the time of the buying programs hereinafter referred to. Thus the Government contends that at the beginning of the indictment period and continuing through 1935 and 1936, the prices at which the defendants sold the great bulk of their gasoline were directly controlled and determined by prices received by independent refiners of a relatively small amount of gasoline by reason of the following: (1) The prices of all gasoline sold by the defendants to jobbers under contract were based upon the spot market quotations-as published by the two trade journals. (2) The prices of all gasoline sold at retail by the defendants were based upon the same spot market quotations. (3) The spot market prices published in the journals were the result of spot sales by independent refiners of gasoline amounting to not more than 7%% of all the gasoline sold in the Mid-Western area- Prior to a statement concerning the alleged unlawful buying programs, it seems appropriate to refer to the history of the oil industry during the two-year period prior to the indictment, and the efforts during that time to rehabilitate and stabilize the same, upon which appellants lay great stress. Many pages of the briefs are thus occupied and again we do not find it easy to condense such a statement and do justice-to both sides. It is plainly apparent that for several years prior to the alleged conspiracy, the gravest problem confronting the oil industry was the over-production of crude oil, which inevitably resulted in. an over-supply of gasoline. This meant a decline in prices often below the cost of production. As new fields were developed the problem became more acute. Both State and Federal Governments actively engaged themselves in attempting to-remedy and solve the problems in various ways, such as curtailment of production, buying programs and the fixing of prices-at which crude oil could be sold. The States of Texas, Oklahoma and Kansas-passed proration laws limiting production. Crude oil produced in violation of such laws became known as “hot oil” and the gasoline manufactured therefrom, as “hot gasoline.” The states had little success in the enforcement of such laws and as a result legal gasoline was at a great disadvantage in meeting competition. Out of this situation grew price wars of much concern to Governmental agencies, which resulted in great loss to all branches of the industry engaged in the legitimate field. Beginning in March, 1933, the Federal Government, the interested states and the industry joined in a general movement to eliminate such destructive practices and to restore healthy competitive conditions. The record sustains appellants’ statement that it was sought to accomplish three principal objectives: (1) The restoration of the price of crude oil to a minimum of $1 per barrel. That was the minimum price at which the vast majority of the crude oil wells’of the country could operate. (2) The restoration of the price level of gasoline at wholesale at the refinery to “parity” with crude oil; that is, a price which would reflect the normal relation between the price of gasoline and the price of crude oil from which it is manufactured. (3) The stabilization of retail prices at a normal spread or margin between the refinery price of gasoline and the retail price. In June, 1933, Congress passed the National Industrial Recovery Act (48 Stat. 195) which authorized the President to forbid the interstate shipment of oil or gasoline produced or manufactured in violation of state proration laws. On July 11, 1933, the President, by Executive proclamation, ■ forbade such shipments. Under this Act a Code was formulated prohibiting sales below, cost, defining the natural parity relationship between the price of a barrel of crude oil and a gallon of refined gasoline as 18.5 to 1, and authorized the fixing of minimum prices for crude oil and its products.' The President appointed the Secretary of the Interior to be the Administrator of such Code, and the Secretary selected members of his staff, known as the Petroleum Administrative Board. A committee, known as the Planning and Coordination Committee, to aid in the administration of the Code, was appointed by the President. In addressing this committee in September, 1933, the Secretary of the Interior said: “Gentlemen, we have a solemn duty to perform. Our task is to stabilize the oil industry upon a profitable basis. This is the keen desire of the Administration and we will work with you constantly to that end. * * *« By September 29, 1933, the price of crude oil was established at $1.00 per barrel and that was the minimum price maintained throughout the Code period. On one occasion the Secretary approved an order fixing minimum prices based upon the cost of production and manufacture for crude oil, gasoline and other petroleum products, but this order never became effective. In April, 1934, an amendment to the Code was adopted under which an attempt was made to balance supply and demand of the refined product by allocating the amount of crude oil which each refiner could process. The Government sponsored various buying programs wherein the major companies contracted to relieve the independent refiners of their surplus gasoline at prices above the going market. It appears that these programs were later suspended because of doubtful legality. “Hot oil” constituted the chief stumbling block to the success of the various programs. Refiners in the field could procure such oil for 35^ or less a barrel, and manufacture gasoline therefrom for 24 or 2%^ a gallon, while the parity price based upon $1.00 oil was from 5^ to 64. Another term which finds much use in this case is “distress gasoline.” This is described by appellants as legal gasoline manufactured by independent refiners who had to dump it on the market for whatever price it would bring. It is pointed out that the purchase contract of the independent refiner required him to take all the crude oil which the seller was permitted by law to produce. Any cessation of his refinery operations would result in the loss of his crude oil connections. Thus he was compelled to manufacture gasoline regardless of the demand. The Government contends that the term “distress gasoline” is a misnomer and that it constituted nothing more than a surplus. In July, 1934, members of the Petroleum Administrative Board called on appellant Arnott, Chairman of the Marketing Committee of the Planning and Coordination Committee, and requested that he undertake the responsibility of heading a voluntary cooperative movement to deal with price wars. This he agreed to do, pointing out that it would be necessary to eliminate “hot oil” and “distress gasoline.” Under date of July 20, 1934, Arnott received a letter from the Secretary of the Interior which, after reviewing the price wars existing in many localities and the resultant effect which they were having upon the market for oil products, pointed out that the existing conditions would tend to frustrate the purposes of the National Industrial Recovery Act by increasing unemployment, reducing standards of labor, and preventing the rehabilitation of the industry. Arnott was authorized to confer, negotiate and hold public hearings for the purpose of stabilizing the price level. In October, 1934, a “Federal Tender Board” was appointed by the Secretary of the Interior for the purpose of preventing shipment in interstate commerce of “hot oil” and “hot gasoline.” Thereafter, oil or gasoline could only be shipped in interstate commerce when accompanied by a certificate or tender issued by the Board certifying as to the legality of its production or manufacture. This action had its immediate effect, increasing the “spot” market tank-car price of gasoline by 1%^. The Tender Board was stripped of its authority by the decision' of the court in Panama Refining Company v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446. To meet the emergency thus created, Congress, in February, 1935, passed the Connally Act (15 U.S.C.A. § 715 et seq.) which again prohibited the shipinent in interstate commerce of “hot oil” and “hot. gasoline,” and again the price of gasoline rapidly increased. We shall now discuss the alleged unlawful buying programs. The formation and operation of the Mid-Continent program is not in dispute. Appellants (with the exception hereinafter noted) admit that they participated in a concerted program for the purchase of gasoline from independent refiners in the Mid-Continent fields at “going market prices” from March, 1935 to May, 1936, for the purpose of stabilizing the tank-car market. The program was organized at a series of meetings held during the first three months of 1935. The first meeting, called by appellant Arnott and attended by all of the appellants, was held in Chicago, January 4, 1935. At this meeting a committee was appointed called the “Tank-car Stabilization Committee,” consisting of eight representatives of the defendant companies, including appellants Ashton and McDowell. The situation confronting the industry was discussed at this meeting and it was generally conceded that the gains achieved in stabilizing the retail market could not be maintained unless some action was taken with reference to “distress gasoline.” The Stabilization Committee had three meetings — one on February 5th in Chicago, another on February 11th in Chicago, and the third on March 5th in St. Louis, Missouri. Without going into detail as to what took place at these meetings, we think the substance of what was accomplished and agreed upon was that the major companies would purchase from the independent refiners the latters’ surplus gasoline at going market prices. Surveys disclosed that this surplus gasoline of the independent refiners in the Mid-Continent fields amounted to from 600 to 700 cars each month. Defendant Bourque was designated to make surveys with the view of ascertaining the amount of surplus gasoline and furnishing such information to the defendant companies. A mechanical sub-committee consisting of one Jacobi, the appellant McDowell, and the defendant Tuttle, was appointed to assist in the disposal of surplus gasoline not anticipated by the monthly surveys. It was also a part of the function of this sub-committee to urge companies to pay the fair going market price. The plan was a voluntary one and we find nothing in the record to indicate that anyone participating in the program was to be penalized for noncompliance therewith. The independent refiners who sold to the defendants in the program met with the defendants and agreed to cooperate. The program commenced operation on March 7, 1935. During that month between 500 and 600 cars were purchased by the defendants, and thereafter, continuing through April, 1936, their purchases amounted to between 600 and 800 cars per month. The Tank-car Stabilization Committee held monthly meetings at which the surveys with reference to surplus gasoline were considered. There is evidence to the effect that the committee recommended the ■amount which each company should purchase and that the companies felt a moral obligation to comply therewith. The Mechanical Sub-Committee also met frequently and was in frequent contact with the purchasing companies, oftentimes urging them to increase the amount of their purchases. The defendant companies reported monthly to Bourque the volume of purchases and the prices paid in connection therewith. Although there is evidence that the defendants in some instances purchased more gasoline than they actually required, it was all disposed of in the usual channels of trade. There is evidence, rather indefinite and uncertain, that certain employees of the purchasing companies considered that allocations were being made along lines similar to those which had been made under the Code, and that the companies were obligated with respect to such allocations; but the record is far from convincing in this respect. The Tank-car Stabilization Committee was concerned with the price at which purchases were to be made, but it seems the Committee was chiefly interested with prices not below the going market price. In fact, no purchases were made above that price and prices actually paid to the independent refiners varied considerably. This was especially true during March, 1935, when three or four different prices were paid on the same day by the purchasing companies. More than one price was paid on 72% of a certain number of days on which purchases were made in the early part of the alleged conspiracy. The evidence concerning the amount of gasoline purchased by the defendants varies widely. The Government contends that from 34% to 51% in 1935, and from 38% to 58% in 1936, of all the gasoline sold on the “spot” market by the Mid-Continent independent refiners named in the indictment, and from approximately 20% to 30% during both years of all the gasoline sold on such market by twenty-nine independent refiners in the Mid-Continent field was purchased by the defendants; while defendants contend that the total amount purchased from the independent refiners was from 18% to 27%. The Government contends there is evidence to sustain the allegation that the independent refiners “curtailed their production of gasoline,” while appellants contend to the contrary. The fact is undisputed that the production of the independent refiners in 1935, over the previous year, was from 17% to 21% greater, and that in 1936, the production was 12% greater than in 1935. The Government points out that this situation is deceptive, inasmuch as production was curtailed under the Code during 1934 and the first five months of 1935. The East Texas buying program referred to in the indictment may be described more briefly. Early in 1935, certain independent refiners in East Texas formed an association called the East Texas Refiners Marketing Association. The purpose of this association was to find a market for its surplus gasoline, and in an effort to accomplish this purpose, it contacted certain of the officials interested in the Mid-Continent program. Previous to this time the East Texas refiners had sold only a small part of their product in the Mid-Western area. Shortly thereafter, certain of the defendant companies commenced purchasing through the association and purchased an average of 600 to 700 cars monthly. The purpose of this buying program was similar to that of the Mid-Continent, i. e., for the purpose of stabilizing the gasoline market. The defendants evidently realized the importance of buying the surplus product from the Texas field if their effort in the Mid-Continent field was to succeed. This program, like the other, contemplated the purchase of gasoline at fair going market prices and the prices paid generally coincided with the low quotations of Platt’s Oilgram. We think it is fair to state, however, that this program was largely under the control of the Secretary of the East Texas Association, and that the program has more of the earmarks of a seller’s program by that association than a buyer’s program by the defendants. Here again the evidence is in conflict as to the amount purchased — the Government contending that in 1935 the defendants purchased 20% of the total production of all the independent refiners in the East Texas field, while defendants contend that it was about 12%. It is the contention of the Government that the buying program produced an artificial and non-competitive condition of the tank-car market during the indictment period. We shall reserve discussion of this contention to a later time. The fact is, however, there was a consistent rise in price from March to May of 1935. The increase amounted to about 1%^ per gallon between February and June 1st, and from that time until the end of 1935, the price level remained firm, with only slight deviations. The increase in price was attributed by numerous witnesses to the buying programs, although there is substantial evidence that other factors contributed to such increase. In the. early part of January, 1936, prices were advanced in conformity with a comparable advance in the price of crude oil. Contested Issues. Of the many contested issues and assignments of error, we shall only undertake to discuss those which have been argued by the respective parties. Such issues stated by appellants in the affirmative — the Government contending to the contrary as to each — are: I. There was a total failure of proof as to the essential allegation of the indictment, namely, that the defendants conspired to fix the spot market price of gasoline by purchasing gasoline under two buying programs at high, artificial and agreed on prices and causing such prices to be published in the trade journals and falsely representing them as spot market prices paid by jobbers in purchasing gasoline from independent refiners. II. There was a material and prejudicial variance between the charge of the indictment and the issues on which the case was permitted to go to the jury. III. The court committed reversible error in overruling the defendants’ motions for directed verdicts. IV. The trial court committed prejudicial error by (a) improperly limiting the extent to which the jury could consider the facts and circumstances surrounding the defendants’ activities, and (b) instructing the jury that an agreement embracing the raising of prices by a group controlling a substantial amount of the trade in a commodity is illegal per se. By so doing the court, in effect, directed a verdict against the defendants. V. The court committed prejudicial error in excluding the evidence offered by the defense as to the facts and circumstances surrounding the alleged agreement in restraint of trade. VI. The District Court for the Western District of Wisconsin had'no jurisdiction to try these defendants because the proof failed to establish that any overt act was committed within the Western District of Wisconsin. VII. The court erred in the admission of evidence. VIII. The court erred and abused its discretion in denying the several motions of defendants for a new trial. IX. The trial court committed reversible error in using and permitting Government counsel to use alleged transcripts of testimony before the grand jury in the examination of important witnesses. X. The court committed reversible error in permitting Government counsel to make to the jury arguments which constituted appeals to passion, prejudice and class distinction and tended to induce the jury to disregard the record evidence. Before discussing the questions thus presented, we think it would be well to give consideration to a basic proposition, recognized as such by both parties, and about which revolve most of the questions concerning substantive law. The question: Does the proof disclose a violation of the Statute unlawful per se? The ■ position of the Government, forcibly presented, is that the purpose and effect of the conspiracy charged was to fix and control the market price of gasoline and that such a combination is unlawful per se; while on the other hand it is contended by the appellants with equal force that the purpose was merely the stabilization of the industry by the elimination of a competitive abuse, the admitted effect of which was to raise the price, and that such action was not within the condemning statute. The Government relies strongly upon the case of United States v. Trenton Potteries Co., 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700, 50 A.L.R. 989, and cases therein cited, while appellants place almost as great a reliance upon Appalachian Coals, Inc. v. United States, 288 U.S. 344, 53 S.Ct. 471, 77 L.Ed. 825, and the cases therein referred to. We shall first consider the Government’s position. The condemning statute (Act of July 2, 1890, 26 Stat. 209, 15 U.S.C.A. § 1) provides that: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” The enactment generally was accepted, as including every combination which placed any ■ restraint upon interstate commerce until the decisions of the Supreme Court in Standard Oil Col v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A., N.S., 834, Ann.Cas.1912D, 734, and United States v. American Tobacco Co., 221 U.S. 106, 31 S.Ct. 632, 55 L.Ed. 663, wherein the now historie “rule of reason” was promulgated. The court, in the latter case, in referring to its opinion in the former, on page 179 of 221 U.S., 31 S.Ct. on page 648, 55 L.Ed. 663, said: “It was therefore pointed out that the statute did not forbid ■or restrain the power to make normal and usual contracts to further trade by resorting to all normal methods, whether by agreement or otherwise, to accomplish such purpose.” The decisions of the courts, including the Supreme Court, thereafter may be said generally to divide themselves into two classes, namely: Those in which the restraint has been held unlawful per se and those in which the character of the restraint remained open for determination. In each class the restraint imposed upon trade was the object of attack and was determined largely by its effect upon competition. In the former class, those in the combination controlled such a large proportion of an industry as to give them the power to suppress or destroy competition, with the inevitable result that the restraint upon trade was unreasonable as a matter of law. In the latter class, where power to suppress or destroy competition is not shown, the restraint imposed is susceptible of investigation with a view of determining whether it is reasonable or otherwise. A reading of the authorities is convincing that no hard and fast rule can be utilized in determining whether this or that case controls. As was said in Maple Flooring Ass’n v. United States, 268 U.S. 563, 579, 45 S.Ct. 578, 583, 69 L.Ed. 1093: “It should be said at the outset that in considering the application of the rule of decision in these cases to the situation presented by this record, it should be remembered that this court has often announced that each case arising under the Sherman Act must be determined upon the particular facts disclosed by the record,- and that the opinions in those cases must be read in the light of their facts and of a clear recognition of the essential differences in the facts- of those cases, and in the facts of any new case to which the rule of earlier decisions is to be applied.” A view of the instant situation, as favorable to the Government as the facts justify, discloses that defendants, by concerted effort, agreed to purchase on the “spot” market surplus gasoline for the purpose of raising the price on such market, thus enabling them to increase the market price in the Mid-Western area where the price bore a direct relation to the “spot” market price. The program involved the purchase of from 600 to 700 cars of gasoline per month in each of the buying programs. There seems to be no dispute but that this represented the amount of surplus — that is to say, the supply in excess of the regular demand. It also represented, according to the Government’s contention, 20% to 30% sold on the “spot” market by independent refiners in the Mid-Western field and about 20% in the East Texas field, and according to appellants’ contention, about 18% to 27% in the former field and 12% in the latter. Assuming that the Government’s calculation is correct, it means that the program called for the purchase of from one-fifth to nearly one-third of the gasoline sold by independent refiners in the former field and one-fifth in the latter. In this connection, it perhaps is pertinent to point out that gasoline sold on the “spot” market constituted only from 5% to 7%% of the gasoline sold in the indictment territory; that about 80% of all gasoline sold in the territory was sold by the defendants. There was sold in the Mid-Western area in 1935, about five billion gallons of gasoline and in 1936, nearly five and one-half billions, which constituted in 1935 about 21% of the total amount of the products sold in the United States and about 25% in 1936. The record discloses that the plan was voluntary, without coercion, and with no penalty imposed for non-compliance with the recommendation made by the Tank-car Stabilization Committee. It is true that this committee recommended prices at which it was expected the purchases would be made, but these recommendations were based either upon the low or lower-than-the-spot-market quotations. Inasmuch as these quotations varied from day to day, the prices paid by the defendants in the buying program likewise varied. A mere statement of these facts makes it plain that they present such a marked variance from those in the Trenton Potteries case as to make doubtful its applicability. In that case the indictment charged “a combination to fix and maintain uniform prices for the sale of sanitary pottery.” [273 U.S. 392, 47 S.Ct. 378, 71 L. Ed. 700, 50 A.L.R. 989.] The members of the combination included 82% of the manufacturers 'and distributors of such products in the United States. The combination agreed upon a definite price at which their products were to be sold. The essential argument urged upon the Supreme Court was that the case should have been submitted to the jury on the question as to the character of the restraint. It was argued that the price ftked was reasonable and, therefore, the restraint was not unreasonable. In holding to the contrary and that the combination was unlawful per se, the court approved of the charge given by the trial court, that * * The law is clear that an agreement on the part of the members of a combination controlling a substantial part of an industry, upon the prices which the members are to charge for their commodity, is in itself an undue and unreasonable restraint of trade and commerce. * * *’ ” On the following page [273 U.S. 397, 47 S.Ct. 379, 71 L.Ed. 700, 50 A.L.R. 989], the court said: “The aim and result of every price-fixing agreement, if effective, is the elimination of one form of competition. The power to fix prices, whether reasonably exercised or not, involves power to control the market and to fix arbitrary and unreasonable prices. The reasonable price fixed today may through economic and business changes become the unreasonable price of to-morrow. Once established, it may be maintained unchanged because of the absence of competition secured by the agreement for a price reasonable when fixed. Agreements which create such potential power may well be held to be in themselves unreasonable or unlawful restraints, without the necessity of minute inquiry whether a particular price is reasonable or unreasonable as fixed and without placing on the government in enforcing the Sherman Law the burden of ascertaining from day to day whether it has become unreasonable. * * *” The case thus deals entirely with the price fixing combination on the part of those controlling the essential portion of the product, with the resultant power to eliminate competition. The Government also relies upon holdings in prior cases which the court in the Trenton Potteries case relied upon as authoritative precedents for its decision. The four principal cases so relied upon were United States v. Freight Ass’n, 166 U.S. 290, 17 S.Ct. 540,. 41 L.Ed. 1007; United States v. Joint Traffic Ass’n, 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136, and Swift & Company v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518. It is argued by the Government that of these four cases, only the two freight association cases were like the Trenton Potteries case, combinations to fix and maintain uniform minimum selling prices (the railroads’ freight rates being the equivalent of a manufacturer’s selling price). It is further argued that the Addyston case and the Swift case disclose combinations not to fix prices, but to raise prices. We do not believe this is a correct appraisal of those cases. In the former at page 237 of 175 U.S., 20 S.Ct. on page 106, 44 L.Ed. 136, it is said: “The defendants acquired this power by voluntarily agreeing to sell only at prices fixed by their committee, and by allowing the highest bidder at the secret auction pool to become the lowest bidder of them at the public letting.” It is true that the defendants intended and agreed to increase prices, but this purpose was to be accomplished by an agreement to sell only at prices fixed by the committee. The very essence of the combination was therefore the agreement to fix prices. There is language in the Swift case which affords some support to the Government’s argument, but that case is likewise distinguishable from the present by the statement of the court on page 392 of 196 U.S., 25 S.Ct. on page 277, 49 L.Ed. 518: “For the same purposes, and to monopolize the commerce protected by the statute, the defendants combine ‘to arbitrarily, from time to time, raise, lower, and fix prices, and to maintain uniform prices at which they will sell’ to dealers throughout the states. This is effected by secret periodical meetings, where are fixed prices to be enforced until changed at a subsequent meeting. The prices are maintained directly, and by collusively restricting the meat shipped by the defendants, whenever conducive to the result, by imposing penalties for deviations, by establishing a uniform rule for the giving of credit to dealers, etc., and by notifying one another of the delinquencies of such dealers, and keeping a black list of delinquents, and refusing to sell meats to them.” Thus it seems that the concerted action there condemned involved price fixing with penalties imposed for deviations therefrom. It is of more importance, however, as hereinafter pointed out, that in each of these cases competition was eliminated. It is also of some significance to note that they were decided prior to the decisions of the court in Standard Oil Co. v. United States, and United States v. American Tobacco Company, supra. Another case which the Government urges in support of its contention is that of Sugar Institute v. United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859. Again we think that case is distinguishable from the present one upon the facts. There the product was sugar and the defendant companies refined practically all the imported raw sugar processed in this country. They provided more than 80% of all the sugar consumed in the United States. Discussing the agreement involved, the court, 297 U.S. page 582, 56 S.Ct. page 635, 80 L.Ed. 859, said: “The distinctive feature of the ‘basic agreement’ was not the advance announcement of prices, or a concert to maintain any particular basis price for any period, but a requirement of adherence, without .deviation, to the prices and terms publicly announced.” While the court found that the concerted action imposed an unreasonable restraint, we do not understand that it was found to be unlawful per se. In other words, the court considered the nature and character of the industry as well as certain trade abuses and evils with which the industry was afflicted in making its determination. On page 598 of 297 U.S., 56 S.Ct. page 642, 80 L.Ed. 859, it said: “* * Voluntary action to end abuses and to foster fair competitive opportunities in the public interest may be more effective than legal processes. And co-operative endeavor may appropriately have wider objectives than merely the removal of evils which are infractions of positive law. Nor does the fact that the correction of abuses may tend to stabilize a business, or to produce fairer price levels, require that abuses should go uncorrected or that an effort to correct them should for that reason alone be stamped as an unreasonable restraint of trade.” It was pointed out that the defendants went further than was necessary in an attempt to correct the evils and abuses incident to its business, and on page 601 of 297 U.S., 56 S.Ct. on page 643, 80 L.Ed. 859, the court said: “* * * The unreasonable restraints which defendants imposed lay not in advance announcements, but in the steps taken to secure adherence, without deviation, to prices and terms thus announced. It was that concerted undertaking which cut off opportunities for variation in the course of competition however fair and appropriate they might be.” We think we have referred to the strongest of the many cases relied upon by the Government, and we reach the conclusion that they do not support the contention that the evidence here discloses a price fixing agreement unlawful within itself. We now come to the case of Appalachian Coals, Inc., v. United States, supra, which appellants designate as “the leading case,” and upon which the argument is largely predicated that the trial court erred in its refusal to direct a verdict in favor of the appellants. We think it must be conceded that there is much support in this case for appellants’ contention. There an attempt was made to remedy competitive evils in the coal industry by concerted action among competitors. The defendants were 137 producers of bituminous coal in what was known as the Appalachian territory, which included all or parts of four states. In this territory and the immediately surrounding area, the defendants produced 54.21% of the total production or 64% if the output of “captive” mines (those producing for the consumption of the owners) be deducted; and excluding tonnage in the immediately surrounding territory, the defendants’ production amounted to 74.4% of the total production. Approximately 73% of the producers agreed to the concerted action. These producers created Appalachian Coals, Inc., an exclusive selling agency in which they held all the capital stock. It was agreed that the company should sell all coal produced at the best prices obtainable and if all could not be sold, to apportion the same among the defendants on a stated basis. It was the Government’s contention, sustained by the lower court, that the plan violated the Sherman Anti-Trust Act in that it eliminated competition among the defendants themselves, and also gave the selling agency power substantially to affect and control the price of bituminous coal in many interstate markets. The defendants contended that the sellirfg agency did not have the power to dominate or fix the price of coal in any consuming market; that the price of coal would continue to be set in an open competitive market; and that their plan by increasing the sale of bituminous coal from Appalachian territory would promote rather than restrain interstate commerce. There, as here, the essential, problem facing the industry was over production. This unfavorable condition had been aggravated by what the court designated as “distress coal.” The court recited the efforts' made by operators and by state and national officials seeking to remedy the situation. No attempt was made to limit production. It was found that as between the defendants themselves, competition would be eliminated. As the court said, page 367 of 288 U.S., 53 S.Ct. page 477, 77 L.Ed. 825: “* * * This was deemed to be the necessary consequence of a common selling agency with power to fix the prices at which it would make sales for its principals.” In discussing the situation with which the defendants were confronted, the court on page 372 of 288 U.S., 53 S.Ct. on page 478, 77 L.Ed. 825, said: “* * * The evidence leaves no doubt of the existence of the evils at which defendants’ plan was aimed. The industry was in distress. It suffered from overexpansion and from a serious relative decline through the growing use of substitute fuels. It was afflicted by injurious practices within itself— practices which demanded correction. If evil conditions could not be entirely cured, they at least might be alleviated. The unfortunate state of the industry would not justify any attempt unduly to restrain competition or to monopolize, but the existing situation prompted defendants to make, and the statute did not preclude them from making, an honest effort to remove abuses, to make competition fairer, and thus to promote the essential interests of commerce. The interests of producers and consumers are interlinked. When industry is grievously hurt, when producing concerns fail, when unemployment mounts and communities dependent upon profitable production are prostrated, the wells of commerce go dry. So far as actual purposes are concerned, the conclusion of the court below was amply supported that defendants were engaged in a fair and open endeavor to aid the' industry in a measurable recovery from its plight. The inquiry then, must be whether despite this objective the inherent nature of their plan was such as to create an undue restraint upon interstate commerce.” On the following page, in discussing the effect upon prices, it is said: “The contention is, and the court below found, that while defendants could not fix market prices, the concerted action would ‘affect” them, that is, that it would have a tendency to stabilize market prices and to raise them* to a higher level than would otherwise obtain. But the facts found do not establish,, and the evidence fails to show, that any-effect will be produced which in the circumstances of this industry will be detrimental to fair competition. A co-operative-enterprise, otherwise free from objection,, which carries with it no monopolistic menace, is not to be condemned as an undue restraint merely because it may effect a change in market conditions, where the change would be in mitigation of recognized evils and would not impair, but rather foster, fair competitive opportunities.” The court reviews a number of its previous holdings, including that of United States v. Trenton Potteries Company, supra. With reference to that case, it said: “ * * * defendants, who controlled 82 per cent, of the business of manufacturing and distributing vitreous pottery in the United States, had combined to fix prices. It was found that they had the power to do this and had exerted it.” It then proceeds ; “ * * * jn ^e instant case there is, as we have seen, no intent or power to fix prices, abundant competitive opportunities will exist in all markets where defendants’ coal is sold, and nothing has been shown to warrant the conclusion that defendants’ plan will have an injurious effect upon competition in these markets.” It was concluded that the elimination, of competition among the defendants themselves was not sufficient to condemn the-plan, in view of the fact that there remained active competition upon the open market. The Government points out in that case-that the court was dealing largely with what it designated “distress coal” and that surplus gasoline, involved in the buying program in the instant case, does not present a comparable situation. It correctly argues that the coal producer necessarily produces more than one grade of coal and that he is forced to produce those grades, for which there is no ready market in order to produce the grades for which there-is a market; that only the former is designated as “distress.” It is also pointed out that no such situation exists in the pro-. duction of gasoline and that, therefore, the designation of surplus gasoline as “distress” is a misnomer. On the other hand, appellants contend that the refiner is compelled to produce more than market requirements because of his contracts with the oil producers which require him to accept a certain amount of crude oil under penalty of losing his contract. We do not deem it necessary to go into the merits of these respective contentions, ahhough we must confess we do not see any marked distinction between a distress product such as described in the Appalachian case and a surplus product with which we are here concerned. In either instance it is a recognized evil, productive of price wars, unfair competition and detrimental to the best interests of every one connected with the business, from producer to retailer. We can not close our eyes to a theory prevalent in this country, widely proclaimed and embraced by many, including the Government itself, that overproduction, resulting in a huge surplus, is an evil, the effect of which is demoralizing to the industry concerned. This theory has _ been given general recognition, as well as application, by producers, associations and organizations representing the same, and by both Federal and State Governments. In American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S.Ct. 114, 66 L.Ed. 284, 21 A.L.R. 1093, Justice Brandéis, in his dissenting opinion, gave emphatic expression to the evil of overproduction. On page 417 of 257 U.S., 42 S.Ct. on page 123, 66 L.Ed. 284, 21 A.L.R. 1093, he said: “ * * * The purpose of the warnings was to induce mill owners to curb their greed — lest both they and others suffer from the crushing evils of overproduction. Such warning or advice, whether given by individuals or the representatives of an association, presents no element of illegality.” This record is replete with testimony that the Government over a course of years, made a valiant'effort, succeeding to a marked extent, in increasing the price of crude oil by disposing of the surplus and limiting production. If there is any one thing completely established, it is that the oil industry, as well as numerous Governmental agencies, P’ederal and State, have recognized surplus crude oil and surplus gasoline as a distress product, the elimination of which was not only desirable, but necessary, if the industry was to survive, to say nothing of prospering. This situation alone can not be relied upon as a defense, but it affords justification for the action of the defendants in treating surplus gasoline as an evil of the industry and in making a concerted effort to eliminate the same with a view of stabilizing the market, even though an increase in price might result; provided, of course, the program, either as planned or executed, did not go so far as to constitute an unreasonable restraint by unduly suppressing or interfering with fair competition. And we do not think this conclusion is in conflict with the decision of the court in the Trenton Potteries case. There the court was considering a plan, which in its very nature, destroyed competition. It was not even claimed there was any purpose or object to correct a competitive abuse in the industry. There is nothing in the opinion to • indicate that an agreement to raise or affect prices by the elimination of a competitive abuse is per se illegal or that the character of the restraint is not a proper jury question, under such circumstances. A study of the decisions of the Supreme Court convinces one that the criterion employed in determining whether concerted action is such as to come within the condemnation of the statute, is the effect which the action has upon fair competition. If concerted action destroys competition, it is immediately branded as unlawful. In the Trenton Potteries case, as heretofore pointed out, competition was destroyed under facts there existing by reason of the price fixing agreement. Conceivably, however, a price fixing agreement is not unlawful per se under all circumstances as is evidenced by the holding of the court in Board of Trade of City of Chicago v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683, Ann.Cas.1918D, 1207. The court there recognized the assailed agreement as being of a price fixing nature. On page 238 of 246 U.S., 38 S.Ct. on page 244, 62 L.Ed. 683, Ann.Cas.1918D, 1207, it said: “ * * * The case was rested upon the bald proposition, that a rule or agreement by which men occupying positions of strength in any branch of trade, fixed prices at which they would buy or sell during an important part of the business day, is an illegal restraint of trade under the Anti-Trust Law. But the legality of an agreement or regulation cannot be determined by so simple a test, as whether it restrains competition. Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps •thereby promotes competition or whether it is such as may suppress or even destroy competition.” In Appalachian Coals, Inc. v. United States, heretofore discussed, the ultimate factor from which the court reached its conclusion that the assailed agreement was not violative of the statute, was that “abundant competitive opportunities will exist in all markets where defendants’ coal is sold.” In other words, fair competition was preserved’ rather than destroyed. This test has been applied and enforced in many, if not all, of the other cases to which our attention has been called. We shall make reference to a few of the many. In Sugar Institute v. United States, supra, 297 U.S. on page 586, 56 S.Ct. on page 637, 80 L.Ed. 859, the question is thus stated : “ * * * The crucial question— whether, in the ostensible effort to prevent unfair competition, the resources of fair competition have been impaired — is presented not abstractly but in connection with various concrete restrictions to which the decree below was addressed.” In Maple Flooring Ass’n v. United States, supra, the court on page 578 of 268 U.S., 45 S.Ct. on page 583, 69 L.Ed. 1093, said: “* * * In • our view, therefore, the sole question presented by this record for our consideration is whether the combination of the defendants in their exist-, ing association, as actually conducted by them, has a necessary tendency to cause direct and undue restraint of competition in commerce falling within the condemnation of the act.” In Dr. Miles Medical Co. v. John D. Park & Sons. Co., 220 U.S. 373, on page 408, 31 S.Ct. 376, on page 384, 55 L.Ed. 502, the court said: “But agreements or combinations between dealers, having for their sole purpose the destruction of competition and the fixing of prices, are injurious to the public interest and void.” Again, in Addyston Pipe & Steel Co. v. United States, supra, in discussing the purpose o.f the combination under consideration, the court, on page 240 of 175 U. S., 20 S.Ct. on page 107, 44 L.Ed. 136, said: “ * * * and by means of such combination increase the price for which all contracts for the delivery of pipe within the territory above described should be made, and the latter result was to be achieved by abolishing all competition between the parties to the combination.” Likewise, in Swift & Company v. United States, supra, the court on page 400 of 196 U.S., 25 S.Ct. on page 281, 49 L.Ed. 518, said: “* * * The thing done and intended to be done is perfectly definite: with the purpose mentioned, directing the defendants’ agents and inducing each other to refrain from competition in bids. The defendants cannot be ordered to compete, but they properly can be forbidden to give directions or to make agreements not to compete.” As already stated, we are. unable to agree with the contention of the Government that the instant case involves a price fixing agreement unlawful per se. It does not follow, however, that appellants’ contention is sound that the court erred in its refusal to direct a’ verdict under the authority of Appalachian Coals, Inc., v. United States, supra. While such contention finds support in that case, we do not think the reasoning therein, when applied here, goes to the extent of requiring a directed verdict. It must not be overlooked that in that case