1. A combination, entered into by parties within the United
States and made effective by acts done therein, to monopolize the
supply abroad, and the domestic stock, of an article of commerce
produced only in a foreign country, monopolize and control its
importation and sales, destroy competition, and arbitrarily advance
and fix prices and make other unreasonable exaction of purchasers,
is in violation of the Sherman Anti-Trust Act and of § 73 of the
Wilson Tariff Act, as amended February 12, 1913. P. 274 U. S.
2. The fact that their control of the production was aided by
discriminatory legislation of the foreign country does not prevent
punishment of the forbidden results of the conspiracy, within the
United States. American Banana Co. v. United Fruit Co.,
213 U. S. 347
distinguished. P. 274 U. S.
Appeal from a decree of the district court dismissing, on motion
equivalent to a demurrer, a bill by the United States to enjoin an
alleged combination and conspiracy to monopolize the importation
and sale in the United States of sisal -- a fiber which is used for
the manufacture of binder twine and which is produced in Yucatan
Page 274 U. S. 271
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
The United States seek an injunction to prevent appellees from
taking further action in pursuance of a contract, combination, or
conspiracy said to be forbidden by the Sherman Anti-Trust Act and
the Wilson Tariff Act as amended, c. 647, 26 Stat. 209, c. 349, 28
Stat. 509, 570, and c. 40, 37 Stat. 667. The trial court regarded
American Banana Co. v. United Fruit Co., 213 U.
, as controlling, held that no cause of action had
been alleged, and dismissed the bill upon motion.
The bill is confused, difficult to follow, and an excellent
example of bad pleading. An order should direct that it be recast
and conformed to the established rules. Courts ought not to be
burdened by rambling and obscure statements. Nevertheless, we think
enough is alleged to indicate a meritorious cause and to require
reversal of the judgment below.
Appellees are three banking corporations doing business at New
York and New Orleans, two Delaware corporations -- the Eric and the
Sisal Sales -- organized to deal in sisal, a Mexican corporation --
Comision Exportadora de Yucatan -- which buys sisal from the
Page 274 U. S. 272
certain officers and agents of the foregoing corporations, and
members of Hanson & Orth, brokers.
Sisal is the fiber of the henequen plant, a native of Mexico,
and from it is fabricated more than 80 percentum of the binder
twine used for harvesting our grain crops. The annual requirements
of the United States are from 250,000,000 to 300,000,000 pounds.
During one year, 1,000,000 bales -- 375 pounds each -- were
imported. Adequate quantities can be obtained only from Yucatan.
The plant is extensively cultivated there, and the supply has often
exceeded market demands. Prices paid to producers have varied from
less than 4 to 7 or 8 cents per pound.
Prior to 1919, appellee banks advanced large sums to parties
endeavoring to monopolize importation and sale of sisal in the
United States. The Mexican corporation, Comision Reguladora del
Mercado de Henequen, was utilized as an important instrumentality
for making necessary purchases and legislation favorable to it was
secured. For a time, the scheme succeeded; then came collapse.
Through foreclosure of liens held to secure their loans (several
million dollars), appellee banks acquired 400,000 bales of fiber
stored in this country. About that time, through change of laws,
the Yucatan markets were again opened, competition became active,
and prices declined.
Thereupon, appellee banks, acting jointly and within the United
States, entered into and undertook to make effective another and
somewhat different combination or scheme to control the sisal
market, with the ultimate purpose of selling their holdings,
recouping losses, and securing large gains. Later, the other
defendants became parties thereto.
As the direct outcome of this unlawful combination, conspiracy,
and accompanying contracts, it is alleged --
Page 274 U. S. 273
Appellees have secured a monopoly of interstate and foreign
commerce in sisal. The Comision Exportadora de Yucatan has become
sole purchaser of sisal from producers, and the Sisal Sales
Corporation sole importer into the United States. There is no
longer any competition in the trade; excessive prices are
arbitrarily fixed. The sisal acquired by the banks during 1919 has
been sold; undue profits and commissions have been and are
demanded; the conspirators have realized great sums at the expense
of our manufacturers and farmers.
All steps necessary to bring about the above-stated results have
been deliberately taken by appellees. Some of them are stated
The Eric Corporation, organized in August, 1919, and owned and
financed by the banks, took over the large stocks of sisal acquired
by them through foreclosure, also 250,000 bales accumulated in
Yucatan. Laws favorable to it were solicited and secured from the
governments of Mexico and Yucatan. Under them, and by the use of
large sums supplied by the banks, that corporation and its agents
soon became everywhere the dominant factors in the sisal trade.
Prior to January, 1921, the Mexican corporation, Comision
Reguladora del Mercado de Henequen, was the agency for buying and
selling sisal in that country, but, about that time, its business
collapsed. Thereupon, the Comision Monetaria was organized under
the same laws, furnished with large sums of money, and utilized for
such purposes. The governments of both Mexico and Yucatan were
persuaded to pass discriminatory legislation, and all other buyers
were forced out of the markets. But, because of the great supply of
fiber, this plan also proved unsuccessful, and the Eric Corporation
was obliged to increase its large holdings.
Later, by procurement of the banks, the Sisal Sales Company was
organized to deal in sisal, and Hanson &
Page 274 U. S. 274
Orth became its managers. It took title to the sisal held by the
Eric Corporation. The old Comision Reguladora del Mercado de
Henequen was revived as the Comision Exportadora de Yucatan, and
again became the active agent for buying and selling in Mexico.
Laws were solicited and passed which gave it advantages over all
others. Under these, and by the use of funds supplied by the banks,
it soon became the sole buyer of sisal from the producers. It also
acquired the fiber held by the Sisal Sales Corporation on storage
in the United States. Thereupon, the Sisal Sales Corporation,
through contracts, became the exclusive selling agent of the
Comision Exportadora de Yucatan in all markets of the world, and
agreed to furnish the funds necessary for their joint operations.
Appellees thus, and by constant manipulation of the markets,
acquired complete dominion over them, destroyed all competition,
obtained power to advance and arbitrarily to fix excessive prices,
and have made unreasonable exactions.
Accepting as true the allegations of the bill, roughly
summarized above, it is plain enough that appellees are parties to
a successful plan to destroy competition and to control and
monopolize the purchase, importation and sale of sisal. The Sherman
Act inhibits contracts, combinations, and conspiracies to destroy
competition in interstate and foreign trade and commerce, as well
as attempts to monopolize such trade. Sections 73 and 74 of the
Wilson Tariff Act, as amended, *
Page 274 U. S. 275
every combination, conspiracy, trust, agreement, or contract
intended to operate in restraint of trade in, or free competition
in respect of, or intended to increase the market price of, any
article when one of the parties is engaged in importing the same,
and give the courts power to prevent and restrain those who violate
The circumstances of the present controversy are radically
different from those presented in American Banana Co. v. United
Fruit Co., supra,
and the doctrine there approved is not
controlling here. The Banana Company sued for treble damages under
the Sherman Act, basing
Page 274 U. S. 276
its claim upon acts done outside the United States and not
unlawful by the law of the place.
"The substance of the complaint is that, the plantation being
within the de facto
jurisdiction of Costa Rica, that state
took and keeps possession of it by virtue of its sovereign power.
But a seizure by a state is not a thing that can be complained of
elsewhere in the courts. . . . A conspiracy in this country to do
acts in another jurisdiction does not draw to itself those acts and
make them unlawful, if they are permitted by the local law."
Here, we have a contract, combination, and conspiracy entered
into by parties within the United States and made effective by acts
done therein. The fundamental object was control of both
importation and sale of sisal and complete monopoly of both
internal and external trade and commerce therein. The United States
complain of a violation of their laws within their own territory by
parties subject to their jurisdiction, not merely of something done
by another government at the instigation of private parties. True,
the conspirators were aided by discriminating legislation, but, by
their own deliberate acts, here and elsewhere, they brought about
forbidden results within the United States. They are within the
jurisdiction of our courts, and may be punished for offenses
against our laws.
Moreover, appellees are engaged in importing articles from a
foreign country, and have become parties to a contract,
combination, and conspiracy intended to restrain trade in those
articles and to increase the market price within the United States.
Such an arrangement is plainly denounced by § 73 of the Wilson
Tariff Act, as amended.
The decree of the court below must be
MR. JUSTICE STONE took no part in the consideration or decision
of this cause.
* Wilson Tariff Act Aug. 27, 1894, as amended by Act Feb. 12,
"Sec. 73. That every combination, conspiracy, trust, agreement,
or contract is hereby declared to be contrary to public policy,
illegal, and void when the same is made by or between two or more
persons or corporations either of whom, as agent or principal, is
engaged in importing any article from any foreign country into the
United States, and when such combination, conspiracy, trust,
agreement, or contract is intended to operate in restraint of
lawful trade, or free competition in lawful trade or commerce, or
to increase the market price in any part of the United States of
any article or articles imported or intended to be imported into
the United States, or of any manufacture into which such imported
article enters or is intended to enter. Every person who is or
shall hereafter be engaged in the importation of goods or any
commodity from any foreign country in violation of this section of
this Act, or who shall combine or conspire with another to violate
the same, is guilty of a misdemeanor, and, on conviction thereof in
any court of the United States, such person shall be fined in a sum
not less than one hundred dollars and not exceeding five thousand
dollars, and shall be further punished by imprisonment in the
discretion of the court, for a term not less than three months nor
exceeding twelve months."
"Sec. 74. That the several circuit courts of the United States
are hereby invested with jurisdiction to prevent and restrain
violations of section seventy-three of this Act, and it shall be
the duty of the several district attorneys of the United States, in
their respective districts, under the direction of the Attorney
General, to institute proceedings in equity to prevent and restrain
such violations. Such proceedings may be by way of petitions
setting forth the case and praying that such violations shall be
enjoined or otherwise prohibited. When the parties complained of
shall have been duly notified of such petition, the court shall
proceed, as soon as may be, to the hearing and determination of the
case, and, pending such petition and before final decree, the court
may at any time make such temporary restraining order or
prohibition as shall be deemed just in the premises."