322 U.S. 533

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UNITED STATES v. SOUTH-EASTERN UNDERWRITERS ASSOCIATION ET AL.

No. 354

SUPREME COURT OF THE UNITED STATES

322 U.S. 533; 64 S. Ct. 1162; 88 L. Ed. 1440; 1944 U.S. LEXIS 1199; 1944 Trade Cas. (CCH) P57,253

January 11, 1944, Argued

June 5, 1944, Decided

SUBSEQUENT HISTORY: As Amended.

PRIOR HISTORY: APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF GEORGIA.

APPEAL under the Criminal Appeals Act from a judgment sustaining a demurrer to an indictment for violation of the Sherman Antitrust Act.

DISPOSITION: 51 F.Supp. 712, reversed.

CASE SUMMARY

PROCEDURAL POSTURE: Appellant government sought review of an order from the District Court of the United States for the Northern District of Georgia that sustained appellee insurance association's demurrer that appellee was not required to conform to the Sherman Act, 15 U.S.C.S. @ 1, on the ground that the business of insurance was not commerce, either intrastate or interstate.

OVERVIEW: The Supreme Court reversed the district court's order sustaining appellee insurer's demurer that appellee was not required to comply with the Sherman Act. Appellee argued that the business of insurance was not engaged in commerce among the states and did not come under the commerce clause or the Sherman Act. On review the court held that a contract of insurance itself did not constitute interstate commerce, but after the entire transaction was examined, there was a chain of events that became interstate commerce. The court reasoned that the allegations of monopoly and interference with trade, virtually admitted to by appellant, was just the type of activity that Congress intended to prevent by enacting the Sherman Act. The court held that the powers conferred by the commerce clause were not confined to the instrumentalities of commerce known or in use when the constitution was adopted, but were to keep pace with the progress of the country and adapt themselves to the new developments of time and circumstances.

OUTCOME: The district court order sustaining appellee insurance association's demurrer to the indictment charging violations of the Sherman Act was reversed because, while the contract for insurance itself was not interstate commerce, there was a chain of events such as transfer of funds, information, and communication over state lines that brought the activity under the commerce clause and Sherman Act.

CORE CONCEPTS

Antitrust & Trade Law : Sherman Act See 15 U.S.C.S. @1.

Antitrust & Trade Law : Sherman Act See 15 U.S.C.S. @ 2.

Constitutional Law : Congressional Powers & Duties : Commerce Clause Congress can regulate traffic though it consist of intangibles.

Constitutional Law : Congressional Powers & Duties : Commerce Clause A nationwide business is not deprived of its interstate character merely because it is built upon sales contracts which are local in nature.

Constitutional Law : Congressional Powers & Duties : Commerce Clause For Constitutional purposes, certain activities of a business may be intrastate and subject to state control, while other activities of the same business may be interstate and subject to federal regulation. There is a wide range of business and other activities which, though subject to federal regulation, are so intimately related to local welfare that, in the absence of congressional action, they may be regulated or taxed by the states. In marking out these activities the primary test applied by the court is not the mechanical one of whether the particular activity affected by the state regulation is part of interstate commerce, but rather whether, in each case, the competing demands of the state and national interests involved can be accommodated. The fact that particular phases of an interstate business or activity have long been regulated or taxed by states has been recognized as a strong reason why, in the continued absence of conflicting congressional action, the state regulatory and tax laws should be declared valid.

Constitutional Law : Congressional Powers & Duties : Commerce Clause Commerce is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches Commerce is interstate when it concerns more states than one.

Constitutional Law : Congressional Powers & Duties : Commerce Clause Commerce comprehends intercourse for the purposes of trade in any and all its forms, including the transportation, purchase, sale, and exchange of commodities, and intercourse or communication between persons in different states, by means of correspondence through the mails, is commerce among the states within the meaning of the constitution, especially where such intercourse and communication really relates to matters of regular, continuous business and to the making of contracts and the transportation of books, papers, etc., appertaining to such business.

Constitutional Law : Congressional Powers & Duties : Commerce Clause The power confided to congress by the commerce clause is declared to be for the purpose of securing the maintenance of harmony and proper intercourse among the States. But its purpose is not confined to empowering congress with the negative authority to legislate against state regulations of commerce deemed inimical to the national interest. The power granted congress is a positive power. It is the power to legislate concerning transactions which, reaching across state boundaries, affect the people of more states than one; to govern affairs which the individual states, with their limited territorial jurisdictions, are not fully capable of governing. This federal power to determine the rules of intercourse across state lines was essential to weld a loose confederacy into a single, indivisible nation; its continued existence is equally essential to the welfare of that nation.

Constitutional Law : Congressional Powers & Duties : Commerce Clause The powers conferred by the commerce clause are not confined to the instrumentalities of commerce known or in use when the constitution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of time and circumstances. They are intended for the government of the business to which they relate, at all times and under all circumstances.

Antitrust & Trade Law : Sherman Act The provisions of the Sherman Act, 15 U.S.C.S. @ 1, are just as broad, sweeping, and explicit as the English language can make them to express the power of Congress over this subject under the constitution of the United States.

SYLLABUS:

1. A fire insurance company which conducts a substantial part of its business transactions across state lines is engaged in "commerce among the several States" and subject to regulation by Congress under the Commerce Clause. P. 539.

2. A conspiracy to restrain interstate trade and commerce by fixing and maintaining arbitrary and noncompetitive premium rates on fire and allied lines of insurance, and a conspiracy to monopolize interstate trade and commerce in such lines of insurance, held violations of the Sherman Antitrust Act. P. 553.

3. Congress did not intend that the business of insurance should be exempt from the operation of the Sherman Act. Pp. 553, 560.

COUNSEL: Attorney General Biddle, with whom Solicitor General Fahy, Assistant Attorney General Berge, and Messrs. Robert L. Stern, Frank H. Elmore, Jr., and Manuel M. Gorman were on the brief, for the United States.

Messrs. John T. Cahill and Dan MacDougald, with whom Messrs. Thurlow M. Gordon, Neil C. Head, Jerrold G. Van Cise, and Howard C. Wood were on the brief, for appellees.

Briefs were filed (1) on behalf of the States of Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Utah, Vermont, Washington, Wisconsin and West Virginia, and (2) on behalf of the State of Virginia, as amici curiae, urging affirmance.

JUDGES: Stone, Black, Frankfurter, Douglas, Murphy, Jackson, Rutledge; Roberts, Reed took no part in the consideration or decision of this case

OPINIONBY: BLACK

OPINION:

[*534] [**1164] [***1446] MR. JUSTICE BLACK delivered the opinion of the Court.

For seventy-five years this Court has held, whenever the question has been presented, that the Commerce Clause of the Constitution does not deprive the individual states of power to regulate and tax specific activities of foreign insurance companies which sell policies within their territories. Each state has been held [***1447] to have this power even though negotiation and execution of the companies' policy contracts involved communications of information and movements of persons, moneys, and papers across state lines. Not one of all these cases, however, has involved an Act of Congress which required the Court to decide the issue of whether the Commerce Clause grants to Congress the power to regulate insurance transactions stretching across state lines. Today for the first time in the history of the Court that issue is squarely presented and must be decided.

Appellees -- the South-Eastern Underwriters Association (S. E. U.A.), and its membership of nearly 200 private stock fire insurance companies, and 27 individuals -- were indicted in the District Court for alleged violations of the Sherman Anti-Trust Act. The indictment alleges two conspiracies. The first, in violation of @ 1 of the Act, was to restrain interstate trade and commerce by fixing and maintaining arbitrary and non-competitive premium rates on fire and specified "allied lines" n1 of insurance in [*535] Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia; the second, in violation of @ 2, was to monopolize trade and commerce in the same lines of insurance in and among the same states. n2

n1 The "allied lines" of insurance handled by appellees are described in the indictment as "inland navigation and transportation, inland marine, sprinkler leakage, explosion, windstorm and tornado, extended coverage, use and occupancy, and riot and civil commotion insurance."

n2 The pertinent provisions of @@ 1 and 2 of the Act of July 2, 1890, 26 Stat. 209, as amended, 15 U. S. C. @@ 1 and 2, commonly known as the Sherman Act, are as follows:

"Sec. 1. 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 hereby declared to be illegal: ... Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1-7 of this title to be illegal shall be deemed guilty of a misdemeanor. .. combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, ..."

The indictment makes the following charges: The member companies of S. E. U. A. controlled 90 per cent of the fire insurance and "allied lines" sold by stock fire insurance companies in the six states where the conspiracies were consummated. n3 Both conspiracies consisted of a continuing agreement and concert of action effectuated through S. E. U. A. The conspirators not only fixed premium rates and agents' commissions, but employed boycotts together with other types of coercion and intimidation to force non-member insurance companies into the conspiracies, and to compel persons who needed insurance to buy only from S. E. U. A. members on S. E. U. A. terms. Companies not members of S. E. U. A. were cut off from the opportunity to reinsure their risks, and their services and facilities were disparaged; independent sales agencies who defiantly represented [*536] non-S. E. U. A. companies were punished by a withdrawal of the right to represent the members of S. E. U. A.; and persons needing insurance who purchased from non-S. E. U. A. companies were threatened with boycotts and withdrawal of all patronage. The two conspiracies were effectively policed by inspection and rating bureaus in five of the [**1165] six states, together with local boards of insurance agents in certain cities of all six states.

n3 The indictment does not state the proportion of fire insurance and "allied lines" sold by stock companies, as distinguished from mutuals, etc., in the six states involved. But it does state that "stock companies receive approximately 85% of the total premium income of all fire insurance companies operating in the United States."

[***1448] The kind of interference with the free play of competitive forces with which the appellees are charged is exactly the type of conduct which the Sherman Act has outlawed for American "trade or commerce" among the states. n4 Appellees n5 have not argued otherwise. Their defense, set forth in a demurrer, has been that they are not required to conform to the standards of business conduct established by the Sherman Act because "the business of fire insurance is not commerce." Sustaining the demurrer, the District Court held that "the business of insurance is not commerce, either intrastate or interstate"; it "is not interstate commerce or interstate trade, though it might be considered a trade subject to local laws, either State or Federal, where the commerce clause is not the authority relied upon." 51 F.Supp. 712, 713, 714.

n4 See, e. g., Fashion Guild v. Trade Comm'n, 312 U.S. 457, 465-468; United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 210-224; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 394; United States v. Trenton Potteries Co., 273 U.S. 392, 395-402; United States v. Patten, 226 U.S. 525; Swift & Co. v. United States, 196 U.S. 375.

n5 The appellees include all of the individuals and companies named as defendants in the indictment except the Universal Insurance Company and the Kansas City Fire and Marine Insurance Company, neither of which joined in the demurrer to the indictment.

[***HR1] The District Court's opinion does not contain the slightest intimation that the indictment was held defective on a theory that it charged the appellees with restraining and monopolizing nothing but the making of local contracts. [*537] There was not even a demurrer on that ground. The District Court treated the indictment as charging illegal restraints of trade in the total "activities complained of as constituting the business of insurance." 51 F.Supp. 712, 713. And in great detail the indictment set out these total activities, of which the actual making of contracts was but a part. As recognized by the District Court, the insurance business described in the indictment included not only the execution of insurance contracts but also negotiations and events prior to execution of the contracts and the innumerable transactions necessary to performance of the contracts. All of these alleged transactions, we shall hereafter point out, constituted a single continuous chain of events, many of which were multistate in character, and none of which, if we accept the allegations of the indictment, could possibly have been continued but for that part of them which moved back and forth across state lines. True, many of the activities described in the indictment which constituted this chain of events might, if conceptually separated from that from which they are inseparable, be regarded as wholly local. But the District Court in construing the indictment did not attempt such a metaphysical separation. Looking at all the transactions charged, it felt compelled by previous decisions of this Court to hold that despite the interstate character of many of them "the business of insurance is not commerce," and that as a consequence this "business," contracts and all, could not be "interstate commerce" or "interstate trade." In other words, the District Court held the indictment bad for the sole reason that the entire "business of insurance" (not merely the part of the business in which contracts are physically executed) can never under any possible circumstances be "commerce," and that therefore, even though an insurance company conducts a substantial part of its business transactions across state lines, it is not engaged in "commerce among the States" within the meaning of [*538] either the Commerce Clause or the Sherman [***1449] Anti-Trust Act. n6 Therefore [**1166] to say that the indictment charges nothing more than restraint and monopoly in the "mere formation of an insurance contract," as has been suggested in this Court, is to give it a different and narrower meaning than did the District Court, -- something we cannot do consistently with the Criminal Appeals Act which permits the case to come here on direct appeal. n7

n6 Although the District Court also sustained two additional grounds of demurrer (that the indictment did not state facts sufficient to constitute a federal offense, and that the court lacked jurisdiction of the subject matter), the opinion makes clear it did so because of the conclusion that "the business of insurance is not commerce." Two further grounds of demurrer, based upon the Fifth, Sixth, and Tenth Amendments, were not considered by the District Court.

n7 See 56 Stat. 271 amending 34 Stat. 1246; 18 U. S. C. 682; United States v. Borden Co., 308 U.S. 188, 192-193. Appellees contend that the District Court read both counts of the indictment as alleging that the trade or commerce sought to be restrained and monopolized was the business of selling fire insurance, that the Court rightly decided that such business was not commerce, and that therefore its judgment should be affirmed. The Government denies that the Court construed the indictment so narrowly. It insists that the first count of the indictment charges a violation of @ 1 of the Act regardless of whether the insurance business itself be commerce, since that count charges that the practices of the fire insurance companies constituted an unlawful restraint of interstate trade or commerce in such fields as transportation and industry which must purchase fire insurance. Cf. Polish Alliance v. Labor Board, post, p. 643. In the view we take of the case it is unnecessary to pass upon this question. We consider the case on the assumption that appellees' contention on this point is correct.

The record, then, presents two questions and no others: (1) Was the Sherman Act intended to prohibit conduct of fire insurance companies which restrains or monopolizes the interstate fire insurance trade? (2) If so, do fire insurance transactions which stretch across state lines constitute "Commerce among the several States" so as to make them subject to regulation by Congress under the [*539] Commerce Clause? Since it is our conclusion that the Sherman Act was intended to apply to the fire insurance business we shall, for convenience of discussion, first consider the latter question.

[***HR2] Ordinarily courts do not construe words used in the Constitution so as to give them a meaning more narrow than one which they had in the common parlance of the times in which the Constitution was written. To hold that the word "commerce" as used in the Commerce Clause does not include a business such as insurance would do just that. Whatever other meanings "commerce" may have included in 1787, the dictionaries, encyclopedias, and other books of the period show that it included trade: business in which persons bought and sold, bargained and contracted. n8 And this meaning has persisted to modern times. Surely, therefore, a heavy burden is on him who asserts that the plenary power which the Commerce Clause grants to Congress to regulate "Commerce among the several States" does not include the power to regulate trading in insurance to the same extent that it includes power to regulate other trades or businesses conducted across state lines. n9

n8 See Gibbons v. Ogden, 9 Wheat. 1; also, Hamilton and Adair, The Power to Govern (N. Y. 1937), pp. 53-63.

n9 Alexander Hamilton, in 1791, stating his opinion on the constitutionality of the Bank of the United States, declared that it would "admit of little if any question" that the federal power to regulate foreign commerce included "the regulation of policies of insurance." 3 Works of Alexander Hamilton (Fed. Ed., N. Y. 1904) pp. 445, 469-470. Speaking of the need of a federal power to regulate "commerce," Hamilton had earlier said, "It is, indeed, evident, on the most superficial view, that there is no object, either as it respects the interests of trade or finance, that more strongly demands a federal superintendence." Federalist No. XXII, The Federalist (Rev. Ed., N. Y. 1901) 110.

[***HR3] The modern insurance business holds a commanding position in the trade and commerce of our Nation. Built [*540] upon the sale of contracts of indemnity, it has become one of the largest and most important branches of commerce. n10 Its total assets [**1167] exceed $ 37,000,000,000, or the approximate equivalent of the value of all farm lands and buildings in the United States. n11 Its annual premium receipts exceed $ 6,000,000,000, more than the average annual revenue receipts of the United States Government during the last decade. n12 Included in the labor force of insurance are 524,000 experienced workers, almost as many as seek their livings in coal mining or automobile manufacturing. n13 Perhaps no modern commercial enterprise directly affects so many persons in all walks of life as does the insurance business. Insurance touches the home, the family, and the occupation or the business of almost every person in the United States. n14

n10 According to figures gathered by the National Resources Committee, each of the three largest legal reserve life insurance companies in 1935 had assets greater than any one of the three largest industrial corporations, viz., the Standard Oil Company of New Jersey, the United States Steel Corporation, or the General Motors Corporation. Report to the President by the National Resources Committee, June 9, 1939: The Structure of the American Economy, Part I, pp. 100, 101 (U.S. Government Printing Office).

n11 U.S. Department of Commerce, Statistical Abstract of the United States, 1942, pp. 335-342, 694.

n12 Ibid., pp. 195, 335-342.

n13 Sixteenth Census of the United States -- 1940; Part 1: United States Summary, Vol. III, The Labor Force, pp. 180, 181.

n14 "We have shown that the business of insurance has very definite characteristics, with a reach of influence and consequence beyond and different from that of the ordinary businesses of the commercial world, to pursue which a greater liberty may be asserted. ... Insurance ... is practically a necessity to business activity and enterprise. It is, therefore, essentially different from ordinary commercial transactions, and, as we have seen, according to the sense of the world from the earliest times -- certainly the sense of the modern world -- is of the greatest public concern." German Alliance Ins. Co. v. Kansas, 233 U.S. 389, 414-415.

[*541] This business is not separated into 48 distinct territorial compartments which function in isolation from each other. Interrelationship, interdependence, and integration of activities in all the states in which they operate are practical aspects of the insurance companies' methods of doing business. A large share of the insurance business is concentrated in a comparatively few companies located, for the most part, in the financial centers of the East. n15 Premiums collected from policyholders in every part of the United States flow into these companies for investment. As policies become payable, checks and drafts flow back to the many states [***1451] where the policyholders reside. The result is a continuous and indivisible stream of intercourse among the states composed of collections of premiums, payments of policy obligations, and the countless documents and communications which are essential to the negotiation and execution of policy contracts. Individual policyholders living in many different states who own policies in a single company have their separate interests blended in one assembled fund of assets upon which all are equally dependent for payment of their policies. The decisions which that company makes at its home office -- the risks it insures, the premiums it charges, the investments it makes, the losses it pays -- concern not just the people of the state where the home office happens [*542] to be located. They concern people living far beyond the boundaries of that state.

n15 The five largest legal reserve life insurance companies, owning total assets of approximately $ 15,000,000,000, have their home offices in or near New York City. Best's Life Reports, 1939, as summarized in Monograph 28 printed for the use of the Temporary National Economic Committee, Appendix A (U.S. Government Printing Office, 1940). Each of these companies is licensed in every state of the Union except that two of them are not licensed in Texas. Life Insurance Year Book, 1942-3.

The five largest stock fire and marine insurance companies, owning total assets of approximately $ 550,000,000, are similarly located. Best's 1943 Digest of Insurance Stocks, xxxii. And each does business in every state of the Union. Ibid.

That the fire insurance transactions alleged to have been restrained and [**1168] monopolized by appellees fit the above described pattern of the national insurance trade is shown by the indictment before us. Of the nearly 200 combining companies, chartered in various states and foreign countries, only 18 maintained their home offices in one of the six states in which the S. E. U. A. operated; and 127 had headquarters in either New York, Pennsylvania, or Connecticut. During the period 1931-1941 a total of $ 488,000,000 in premiums was collected by local agents in the six states, most of which was transmitted to home offices in other states; while during the same period $ 215,000,000 in losses was paid by checks or drafts sent from the home offices to the companies' local agents for delivery to the policyholders. n16 Local agents solicited prospects, utilized policy forms sent from home offices, and made regular reports to their companies by mail, telephone or telegraph. Special travelling agents supervised local operations. The insurance sold by members of S. E. U. A. covered not only all kinds of fixed local properties, but also such properties as steamboats, tugs, ferries, shipyards, warehouses, terminals, trucks, busses, railroad equipment and rolling stock, and movable goods of all types carried in interstate and foreign commerce by every media of transportation.

n16 The amounts given as premiums collected and losses paid during the period 1931-1941 are for all stock fire insurance companies operating in the six states involved. The companies which were parties to the alleged conspiracies probably collected and paid about 90% of these amounts since they controlled that percentage of the total business.

Despite all of this, despite the fact that most persons, speaking from common knowledge, would instantly say that of course such a business is engaged in trade and [*543] commerce, the District Court felt compelled by decisions of this Court to conclude that the insurance business can never be trade or commerce within the meaning of the Commerce Clause. We must therefore consider these decisions.

In 1869 this Court held, in sustaining a statute of Virginia which regulated foreign insurance companies, [***1452] that the statute did not offend the Commerce Clause because "issuing a policy of insurance is not a transaction of commerce." Paul v. Virginia, 8 Wall. 168, 183. n17 Since then, in similar cases, this statement has been repeated, and has been broadened. In Hooper v. California, 155 U.S. 648, 654, 655, decided in 1895, the Paul statement was reaffirmed, and the Court added that, "The business of insurance is not commerce." In 1913 the New York Life Insurance Company, protesting against a Montana tax, challenged these broad statements, strongly urging that its business, at least, was so conducted as to be engaged in interstate commerce. But the Court again approved the Paul statement and held against the company, saying that "contracts of insurance are not commerce at all, [*544] neither state nor interstate." New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495, 503-504, 510. n18

n17 "The defect of the argument lies in the character of their business. Issuing a policy of insurance is not a transaction of commerce. The policies are simple contracts of indemnity against loss by fire, entered into between the corporations and the assured, for a consideration paid by the latter. These contracts are not articles of commerce in any proper meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one State to another, and then put up for sale. They are like other personal contracts between parties which are completed by their signature and the transfer of the consideration. Such contracts are not inter-state transactions, though the parties may be domiciled in different States. The policies do not take effect -- are not executed contracts -- until delivered by the agent in Virginia. They are, then, local transactions, and are governed by the local law." 8 Wall. 168, 183.

n18 Other cases which have repeated or relied upon the Paul generalization are Ducat v. Chicago, 10 Wall. 410, 415; Liverpool Insurance Co. v. Massachusetts, 10 Wall. 566, 573; Philadelphia Fire Assn. v. New York, 119 U.S. 110, 118; Noble v. Mitchell, 164 U.S. 367, 370; New York Life Ins. Co. v. Cravens, 178 U.S. 389, 401; Nutting v. Massachusetts, 183 U.S. 553; Northwestern Mutual Life Ins. Co. v. Wisconsin, 247 U.S. 132; National Union Fire Ins. Co. v. Wanberg, 260 U.S. 71, 75; Bothwell v. Buckbee, Mears Co., 275 U.S. 274, 276-277; and Colgate v. Harvey, 296 U.S. 404, 432. For a collection and analysis of the cases see Gavit, The Commerce Clause of the United States Constitution (Bloomington, Indiana, 1932), pp. 134-139.

In all cases in which the Court has relied [**1169] upon the proposition that "the business of insurance is not commerce," its attention was focused on the validity of state statutes -- the extent to which the Commerce Clause automatically deprived states of the power to regulate the insurance business. Since Congress had at no time attempted to control the insurance business, invalidation of the state statutes would practically have been equivalent to granting insurance companies engaged in interstate activities a blanket license to operate without legal restraint. As early as 1866 the insurance trade, though still in its infancy, n19 was subject to widespread abuses. n20 To meet the imperative need for correction of these abuses [*545] the various state legislatures, including that of Virginia, passed regulatory legislation. n21 Paul v. Virginia upheld one of Virginia's statutes. To uphold insurance laws of other states, including tax laws, Paul v. Virginia's generalization and reasoning have been consistently adhered to.

n19 For statistics illustrative of the tremendous expansion of the fire and marine insurance business between 1860-1941, see New York Insurance Report for 1942, Vol. II, Table A. In 1860 fire and marine insurance companies reporting to the New York Superintendent of Insurance listed assets of $ 44,500,000 and premiums written of $ 13,500,000. In 1941 they listed assets of almost $ 3,000,000,000, and premiums written of $ 1,150,000,000. Ibid.

n20 See generally Insurance Blue Book (Centennial Issue 1876-77), c. VI, " Fire Insurance, 1860-1869"; Patterson, The Insurance Commissioner in the United States (Camb. 1927), pp. 519-537; Nehemkis, Paul v. Virginia, The Need for Re-examination, 27 Georgetown L. J. 519 (1939).

n21 Ibid.

Today, however, we are asked to apply this reasoning, not to uphold another state law, but to strike down an Act of Congress which was intended to regulate certain aspects of the methods by which interstate insurance companies do business; and, in so doing, to narrow the scope of [***1453] the federal power to regulate the activities of a great business carried on back and forth across state lines. But past decisions of this Court emphasize that legal formulae devised to uphold state power cannot uncritically be accepted as trustworthy guides to determine Congressional power under the Commerce Clause. n22 Furthermore, the reasons given in support of the generalization that "the business of insurance is not commerce" and can never be conducted so as to constitute "Commerce among the States" are inconsistent with many decisions of this Court which have upheld federal statutes regulating interstate commerce under the Commerce Clause. n23

n22 See, e. g., Wickard v. Filburn, 317 U.S. 111, 121-122; Binderup v. Pathe Exchange, 263 U.S. 291, 311; Stafford v. Wallace, 258 U.S. 495, 525-528; Bacon v. Illinois, 227 U.S. 504, 516-517; Swift & Co. v. United States, 196 U.S. 375, 400.

n23 That the decisions of this Court upholding state insurance laws do not necessarily constitute a denial of federal power to regulate insurance has, upon occasion, been recognized both by insurance executives and lawyers. See, for example, An Address on the Regulation of Insurance By Congress, by John F. Dryden, President, Prudential Insurance Company of America, delivered November 22, 1904, pp. 12-13: "The decision [Paul v. Virginia], and those that have followed, did not relate to the real point involved in a consideration of the regulation of the insurance business as interstate commerce by the Federal government. ... It is the opinion of qualified authorities who have given most careful consideration to this aspect of the subject ... that under the implied and resulting powers of the Constitution the Supreme Court would not withhold the verdict of constitutionality from an act of Congress declaring interstate insurance to be interstate commerce." See, similarly, Insurance is Commerce, by George F. Seward, President, The Fidelity and Casualty Company of New York (1910) pp. 15-16; S. S. Huebner, Federal Supervision and Regulation of Insurance, Annals, Amer. Acad. of Pol. and Soc. Science, Vol. xxvi, No. 3 (1905) 681-707. But see, e. g., contra: Vance, Federal Control of Insurance Corporations, 17 Green Bag (1905) 83, 89; Randolph, Opinion on the Proposal for Federal Supervision of Insurance (N. Y. 1905) pp. 12-20.

The report of the Committee on Insurance Law of the American Bar Association, in 1906, discussing the constitutionality of federal supervision of insurance, stated flatly that Paul v. Virginia and the cases which follow it "do not bar Congressional action." Reports of American Bar Association, Vol. XXIX, Part 1 (1906), pp. 538, 552-567.

[***HR4] [***HR5] One reason advanced for the rule in the Paul case has been that insurance policies "are not commodities to be shipped [**1170] or forwarded from one State to another." n24 But both before and since Paul v. Virginia this Court has held that Congress can regulate traffic though it consist of intangibles. n25 Another reason much stressed has been that insurance policies are mere personal contracts subject to the laws of the state where executed. But this reason rests upon a distinction between what has been called "local" and what "interstate," a type of mechanical criterion which this Court has not deemed controlling in the measurement of federal power. Cf. Wickard v. Filburn, 317 U.S. 111, 119-120; Parker v. Brown, 317 U.S. 341, 360. [***1454] We may grant that a contract of insurance, considered as a thing apart from negotiation and execution, [*547] does not itself constitute interstate commerce. Cf. Hall v. Geiger-Jones Co., 242 U.S. 539, 557-558. But it does not follow from this that the Court is powerless to examine the entire transaction, of which that contract is but a part, in order to determine whether there may be a chain of events which becomes interstate commerce. n26 Only by treating the Congressional power over commerce among the states as a "technical legal conception" rather than as a "practical one, drawn from the course of business" could such a conclusion be reached. Swift & Co. v. United States, 196 U.S. 375, 398. In short, a nationwide business is not deprived of its interstate character merely because it is built upon sales contracts which are local in nature. Were the rule otherwise, few businesses could be said to be engaged in interstate commerce. n27

n24 See Note 17, supra.

n25 See for illustration Gibbons v. Ogden, 9 Wheat. 1, 189-190, 229-230; Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1; Lottery Case, 188 U.S. 321; Jordan v. Tashiro, 278 U.S. 123, 127-128; Electric Bond & Share Co . v. Securities & Exchange Comm'n, 303 U.S. 419, 432-433; and American Medical Assn. v. United States, 317 U.S. 519.

n26 Cf. Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 317. "The contracts of insurance may be said to be interdependent. They cannot be regarded singly, or isolatedly, and the effect of their relation is to create a fund of assurance and credit, the companies becoming the depositories of the money of the insured, possessing great power thereby and charged with great responsibility." German Alliance Ins. Co. v. Kansas, 233 U.S. 389, 414. And see Furst v. Brewster, 282 U.S. 493, 497-498.

n27 Appraising the Swift case, Mr. Chief Justice Taft had this to say: "That case was a milestone in the interpretation of the commerce clause of the Constitution. It recognized the great changes and development in the business of this vast country and drew again the dividing line between interstate and intrastate commerce where the Constitution intended it to be. It refused to permit local incidents of great interstate movement, which taken alone were intrastate, to characterize the movement as such. [Italics supplied.] The Swift case merely fitted the commerce clause to the real and practical essence of modern business growth." Chicago Board of Trade v. Olsen, 262 U.S. 1, 35.

Compare Indiana Farmer's Guide Co. v. Prairie Farmer Co., 293 U.S. 268, 274-277; Stafford v. Wallace, 258 U.S. 495, 518-519.

[***HR6] [***HR7] [***HR8] Another reason advanced to support the result of the cases which follow [**1171] Paul v. Virginia has been that, if any aspects [*548] of the business of insurance be treated as interstate commerce, "then all control over it is taken from the States and the legislative regulations which this Court has heretofore sustained must be declared invalid." n28 Accepted without qualification, that broad statement is inconsistent with many decisions of this Court. It is settled that, for Constitutional purposes, certain activities of a business may be intrastate and therefore subject to state control, while other activities of the same business may be interstate and therefore subject to federal regulation. n29 And there is a wide range of business and other activities which, though subject to federal regulation, are so intimately related to local welfare that, in the absence of Congressional action, they may be regulated or taxed by the states. n30 In marking out these activities the primary test applied by the Court is not the [***1455] mechanical one of whether the particular activity affected by the state regulation is part of interstate commerce, but rather whether, in each case, the competing demands of the state and national interests involved can be accommodated. n31 And the fact that particular [*549] phases of an interstate business or activity have long been regulated or taxed by states has been recognized as a strong reason why, in the continued absence of conflicting Congressional action, the state regulatory and tax laws should be declared valid. n32

n28 New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495, 509.

n29 See, e. g., Crutcher v. Kentucky, 141 U.S. 47, 59-61; Atlantic Refining Co. v. Virginia, 302 U.S. 22, 26; McGoldrick v. Berwind-White Co., 309 U.S. 33.

n30 See Gibbons v. Ogden, 9 Wheat. 1, 200, 203-210; Willson v. Black Bird Creek Marsh Co., 2 Pet. 245, 250-252; License Cases, 5 How. 504, Opinion of Mr. Chief Justice Taney, 578-586; Cooley v. Board of Wardens, 12 How. 299, 318-321; Kelly v. Washington, 302 U.S. 1, 9-10. Cf. Sturges v. Crowninshield, 4 Wheat. 122, 192-196; Houston v. Moore, 5 Wheat. 1, Opinion of Mr. Justice Story, 48-50.

n31 Parker v. Brown, 317 U.S. 341, 362-363; cf. California v. Thompson, 313 U.S. 109, 112-116; South Carolina State Highway Dept. v. Barnwell Brothers, 303 U.S. 177, 184-192, and cases cited therein in footnote 5; Hall v. Geiger-Jones Co., 242 U.S. 539, 558-559; Bowman v. Chicago & North Western Ry. Co., 125 U.S. 465, 482-483. That different members of the Court applying this test to a particular state statute may reach opposite conclusions as to its validity does not argue against the correctness of the test itself. Such differences in judgment are inevitable where solution of a Constitutional problem must depend upon considered evaluation of competing Constitutional objectives. See, e. g., McGoldrick v. Berwind-White Co., 309 U.S. 33, 48, 59; McCarroll v. Dixie Greyhound Lines, 309 U.S. 176, 183; Duckworth v. Arkansas, 314 U.S. 390, 397; cf. Gwin, White & Prince v. Henneford, 305 U.S. 434, 442.

n32 See, e. g., Cooley v. Board of Wardens, 12 How. 299; New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495; cf. Bowman v. Chicago & North Western Ry. Co., 125 U.S. 465, 482-483.

[***HR9] The real answer to the question before us is to be found in the Commerce [**1172] Clause itself and in some of the great cases which interpret it. Many decisions make vivid the broad and true meaning of that clause. It is interstate commerce subject to regulation by Congress to carry lottery tickets from state to state. Lottery Case, 188 U.S. 321, 355. So also is it interstate commerce to transport a woman from Louisiana to Texas in a common carrier, Hoke v. United States, 227 U.S. 308, 320-323; to carry across a state line in a private automobile five quarts of whiskey intended for personal consumption, United States v. Simpson, 252 U.S. 465; to drive a stolen automobile from Iowa to South Dakota, Brooks v. United States, 267 U.S. 432, 436-439. Diseased cattle ranging between Georgia and Florida are in commerce, Thornton v. United States, 271 U.S. 414, 425; and the transmission of an electrical impulse over a telegraph line between Alabama and Florida is intercourse and subject to paramount federal regulation, Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1, 11. Not only, then, may transactions be commerce though non-commercial; they may be commerce though illegal and [*550] sporadic, and though they do not utilize common carriers or concern the flow of anything more tangible than electrons and information. [***1456] These activities having already been held to constitute interstate commerce, and persons engaged in them therefore having been held subject to federal regulation, it would indeed be difficult now to hold that no activities of any insurance company can ever constitute interstate commerce so as to make it subject to such regulation; -- activities which, as part of the conduct of a legitimate and useful commercial enterprise, may embrace integrated operations in many states and involve the transmission of great quantities of money, documents, and communications across dozens of state lines.

[***HR10] The precise boundary between national and state power over commerce has never yet been, and doubtless never can be, delineated by a single abstract definition. n33 The most widely accepted general description of that part of commerce which is subject to the federal power is that given in 1824 by Chief Justice Marshall in Gibbons v. Ogden, 9 Wheat. 1, 189-190: "Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and [*551] parts of nations, in all its branches. ..." Commerce is interstate, he said, when it "concerns more States than one." Id., 194. No decision of this Court has ever questioned this as too comprehensive a description of the subject matter of the Commerce Clause. n34 [**1173] To accept a description less comprehensive, the Court has recognized, would deprive the Congress of that full power necessary to enable it to discharge its Constitutional duty to govern commerce among the states. n35

n33 Lottery Case, 188 U.S. 321, 363; cf. Kirschbaum Co. v. Walling, 316 U.S. 517, 520. This particular difficulty was recognized by the authors of the Federalist Papers: "All new laws, though penned with the greatest technical skill, and passed on the fullest and most mature deliberation, are considered as more or less obscure and equivocal, until their meaning be liquidated and ascertained by a series of particular discussions and adjudications. ... Here, then, are three sources of vague and incorrect definitions: indistinctness of the object, imperfection of the organ of conception, inadequateness of the vehicle of ideas. Any one of these must produce a certain degree of obscurity. The Convention, in delineating the boundary between the federal and State jurisdictions must have experienced the full effect of them all." Federalist No. XXXVI, The Federalist (Rev. Ed., N. Y. 1901), pp. 193-194.

n34 "Commerce is intercourse: one of its most ordinary ingredients is traffic." Brown v. Maryland, 12 Wheat. 419, 446. "And although commerce includes traffic in this narrower sense, for more than a century it has been judicially recognized that in a broad sense it embraces every phase of commercial and business activity and intercourse." Jordan v. Tashiro, 278 U.S. 123, 127-128.

Commerce "comprehends intercourse for the purposes of trade in any and all its forms, including the transportation, purchase, sale, and exchange of commodities. ..." Welton v. Missouri, 91 U.S. 275, 280. And "intercourse or communication between persons in different States, by means of correspondence through the mails, is commerce among the States within the meaning of the Constitution, especially where ... such intercourse and communication really relates to matters of regular, continuous business and to the making of contracts and the transportation of books, papers, etc., appertaining to such business." International Textbook Co. v. Pigg, 217 U.S. 91, 107.

n35 See Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1, 9.

"A government ought to contain in itself every power requisite to the full accomplishment of the objects committed to its care, and to the complete execution of the trusts for which it is responsible, free from every other control, but a regard to the public good and to the sense of the people." Federalist No. XXX, The Federalist, supra, 154.

[***1457]

[***HR11] The power confided to Congress by the Commerce Clause is declared in The Federalist to be for the purpose of securing the "maintenance of harmony and proper intercourse among the States." n36 But its purpose is not confined to empowering Congress with the negative authority [*552] to legislate against state regulations of commerce deemed inimical to the national interest. The power granted Congress is a positive power. It is the power to legislate concerning transactions which, reaching across state boundaries, affect the people of more states than one; -- to govern affairs which the individual states, with their limited territorial jurisdictions, are not fully capable of governing. n37 This federal power to determine the rules of intercourse across state lines was essential to weld a loose confederacy into a single, indivisible Nation; its continued existence is equally essential to the welfare of that Nation. n38

n36 Federalist No. XL; Federalist No. XLI; The Federalist, supra, pp. 220, 231.

n37 Compare Federalist No. XXIII, The Federalist, supra, 121: "Shall the Union be constituted the guardian of the common safety? Are fleets and armies, and revenues, necessary to this purpose? The government of the Union must be empowered to pass all laws, and to make all regulations which have relation to them. The same must be the case in respect to commerce, and to every other matter to which its jurisdiction is permitted to extend. ... Not to confer in each case a degree of power commensurate to the end, would be to violate the most obvious rules of prudence and propriety, and improvidently to trust the great interests of the nation to hands which are disabled from managing them with vigor and success."

See Note (1943), 32 Georgetown Law Journal 66.

n38 The powers conferred by the Commerce Clause "are not confined to the instrumentalities of commerce ... known or in use when the Constitution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of time and circumstances. ... They were intended for the government of the business to which they relate, at all times and under all circumstances." Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1, 9. Compare Federalist No. XLIII, The Federalist, supra, 248.

Our basic responsibility in interpreting the Commerce Clause is to make certain that the power to govern intercourse among the states remains where the Constitution placed it. That power, as held by this Court from the beginning, is vested in the Congress, available to be exercised [*553] for the national welfare as Congress shall deem necessary. No commercial enterprise of any kind which conducts its activities across state lines has been held to be wholly beyond the regulatory power of Congress under the Commerce Clause. We cannot make an exception of the business of insurance.

[**1174] II.

[***HR12] We come then to the contention, earnestly pressed upon us by appellees, that Congress did not intend in the Sherman Act to exercise its power over the interstate insurance trade.

Certainly the Act's language affords no basis for this contention. Declared illegal in @ 1 is "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States ..."; and "every person" who shall make such a contract or engage in such a combination or conspiracy is deemed guilty of a misdemeanor. Section 2 is not less sweeping. "Every person" who monopolizes, or attempts to monopolize, or conspires with "any other person" to monopolize, "any part of the trade or commerce among the several States" is, likewise, deemed guilty of a misdemeanor. Language more comprehensive is difficult to conceive. On its face it shows a carefully studied [***1458] attempt to bring within the Act every person engaged in business whose activities might restrain or monopolize commercial intercourse among the states.

A general application of the Act to all combinations of business and capital organized to suppress commercial competition is in harmony with the spirit and impulses of the times which gave it birth. "Trusts" and "monopolies" were the terror of the period. n39 Their power to fix [*554] prices, to restrict production, to crush small independent traders, and to concentrate large power in the few to the detriment of the many, were but some of numerous evils ascribed to them. n40 The organized opponents of trusts aimed at the complete destruction of all business combinations which possessed potential power, or had the intent, to destroy competition in whatever the people needed or [*555] wanted. n41 So great was the strength of the anti-trust forces that the issue of trusts [**1175] and monopolies became non-partisan. The question [***1459] was not whether they should be abolished, but how this purpose could best be accomplished. n42

n39 A historian of the Wheel, one of the strongest of the farmers' organizations in the '80's, had this to say about its origin: "The question has often been asked, what gave rise to the Wheel? This question is as easily answered as asked, Monopoly! ... Monopoly aspires to make the people its servants, politically, financially and socially, and demands that we offer on its golden altar all that we are and have, souls, bodies, lives, liberty, and common country, unreservedly and without complaint." Morgan, History of the Wheel and Alliance (Fort Scott, Kan. 1889), p. 56. Compare Slaughter-House Cases, 16 Wall. 36 (1873), Dissenting opinions of Justices Field and Bradley, pp. 83, 101-110, 111, 119-121.

n40 See Apex Hosiery Co. v. Leader, 310 U.S. 469, 491-493, 497-498; Standard Oil Co. v. United States, 221 U.S. 1, 58; United States v. Trans-Missouri Freight Assn., 166 U.S. 290, 322-325. See also Paramount Famous Lasky Corp. v. United States, 282 U.S. 30, 42-43.

Nor was the opposition to trusts limited to the monopolization of "goods and services." At the instance of Senator Ingalls of Kansas an amendment was added to the Sherman bill designed to tax out of existence the business of dealing in futures contracts. 21 Cong. Rec. 2613. The Ingalls amendment was adopted by the Senate without a record vote. Id. Subsequently the Sherman bill, as amended, was redrafted by the Senate Judiciary Committee which used substantially the same broad and sweeping language which Sections 1 and 2 of the Act contain today. With that language the Sherman bill had the support of Senator Ingalls and other proponents of the Ingalls amendment. 21 Cong. Rec. 3145, 3153. And see United States v. Patten, 226 U.S. 525; Peto v. Howell, 101 F.2d 353; cf. Chicago Board of Trade v. Olsen, 262 U.S. 1; Stafford v. Wallace, 258 U.S. 495.

See, generally, Ashby, The Riddle of the Sphinx (Des Moines 1890); Morgan, History of the Wheel and Alliance (Fort Scott, Kan. 1889); Buck, The Granger Movement (Camb. 1913); Cloud, Monopolies and the People (Davenport, Iowa 1873); Weaver, A Call to Action (Des Moines 1892); Hicks, The Populist Revolt (Minneapolis 1931).

n41 Representative of anti-trust platforms, resolutions, etc., of contemporary agrarian-political movements are the following: "We demand ... the passage of a law prohibiting the formation of trusts and combinations by speculators to secure control of the necessaries of life for the purpose of forcing up prices on consumers, imposing heavy penalties" (Texas Farmers' State Alliance, Report of Committee on Industrial Depression (1888)); "The objects of the National Alliance are ... to oppose all forms of monopoly as being detrimental to the best interests of the public" (National Farmers' Alliance, Constitution (1887)); "We hold to the principle that all monopolies are dangerous ... , tending to enslave a free people ..." (National Farmers' Alliance and Industrial Union, Constitution (1889)); "We oppose the tyranny of monopolies" (National Grange, Declaration of Purposes (1874)).

n42 The platforms of both the Republican and the Democratic parties in 1888 stated unqualified opposition to monopolies and trusts. Brandon, Platforms of the Two Great Political Parties 1856-1928. The recorded vote in the House on the final conference report on the Sherman Act shows 242 ayes, no nays, and 85 not voting. 21 Cong. Rec. 6314.

Combinations of insurance companies were not exempt from public hostility against the trusts. Between 1885 and 1912 twenty-three states enacted laws forbidding insurance combinations. n43 When, in 1911, one of these state [*556] statutes was unsuccessfully challenged in this Court, the Court had this to say: "We can well understand that fire insurance companies, acting together, may have owners of property practically at their mercy in the matter of rates, and may have it in their power to deprive the public generally of the advantages flowing from competition between rival organizations engaged in the business of fire insurance. In order to meet the evils of such combinations or associations, the State is competent to adopt appropriate regulations that will tend to substitute competition in the place of combination or monopoly." German Alliance Ins. Co. v. Hale, 219 U.S. 307, 316. n44

n43 Four of these statutes were enacted before 1890. L. N. H. 1885, ch. 93, p. 289; L. Ohio 1885, No. 284, p. 231; L. Mich. 1887, No. 285, p. 384; L. Kan. 1889, ch. 257, p. 389, and L. Kan. 1897, ch. 265, p. 481; L. Ga. 1890-91, No. 745, p. 206; L. Maine 1893, ch. 285, p. 339; L. Mo. 1895, p. 237; L. Iowa 1896, ch. 22, p. 31; L. Ala. 1896-97, No. 634, p. 1428; L. Neb. 1897, ch. 79, p. 347; L. Neb. 1897, ch. 81, p. 354; L. Neb. 1913, ch. 154, pp. 393, 419; L. Wis. 1897, ch. 356, p. 908; Acts Va. 1898, ch. 644, p. 683; Acts S. C. 1902, No. 574, p. 1057; L. S. D. 1903, ch. 158, p. 183; G. L. Tex. 1903, ch. 94, p. 119; Ark. Acts 1905, No. 1, p. 1, as amended by Ark. Acts 1907, No. 184, p. 430; P. L. N. C. 1905, ch. 424, p. 429, and P. L. N. C. 1915, ch. 166, p. 243; Acts Tenn. 1905, ch. 479, p. 1019; Miss. Code 1906, @ 5002, adopted L. Miss. 1906, ch. 101, p. 78; Gen. L. Ore. 1909, ch. 230, pp. 388, 399; Sess. L. Wash. 1911, ch. 49, pp. 161, 195, and Sess. L. Wash. 1915, ch. 97, p. 278; L. Ariz. 1912, ch. 73, p. 354; Acts La. 1912, No. 224, p. 509.

n44 The farm organizations of this period did not rely solely upon prohibitory legislation to protect themselves from combinations of insurance companies. "In 1886, tired of the extortions of the old-line insurance companies, the Territorial Alliance appointed a committee ... to devise and put in operation a system of mutual insurance ... , the result of which has been eminently successful." Report of Alonzo Wardall, President of the Alliance Insurance Companies of the Dakotas, printed in Ashby, The Riddle of the Sphinx (Des Moines 1890), p. 363.

Appellees argue that the Congress knew, as doubtless some of its members did, that this Court had prior to 1890 said that insurance was not commerce and was subject to state regulation, and that therefore we should read the Act as though it expressly exempted that business. But neither by reports nor by statements of the bill's sponsors or others was any purpose to exempt insurance companies revealed. And we fail to find in the legislative history of the Act an expression of a clear and unequivocal desire of Congress to legislate only within that area previously [*557] declared by this Court to be within the [**1176] federal power. n45 Cf. Helvering v. Griffiths, [***1460] 318 U.S. 371; Parker v. Motor Boat Sales, 314 U.S. 244. We have been shown not one piece of reliable evidence that the Congress of 1890 intended to freeze the proscription of the Sherman Act within the mold of then current judicial decisions defining the commerce power. On the contrary, all the acceptable [*558] evidence points the other way. That Congress wanted to go to the utmost extent of its Constitutional power in restraining trust and monopoly agreements such as the indictment here charges admits of little, if any, doubt. n46 [*559] The purpose was to use that [**1177] power to make of ours, so far [***1461] as Congress could under our dual system, a competitive business economy. n47 Nor is it sufficient to justify our reading into the Act an exemption for insurance that the Congress of 1890 may have known that states already were regulating the insurance business. The Congress of 1890 also knew that railroads were subject to regulation not only by states but by the federal government itself, but this fact has been held insufficient to bring to the railroad companies the interpretative exemption from the Sherman Act they have sought. United States v. Trans-Missouri Freight Assn., 166 U.S. 290, 314-315, 320-325.

n45 We have been pointed to only one reference made to the business of insurance in the Congressional discussions preceding passage of the Sherman Act, and that is a statement of Senator Turpie which flatly challenged the reasoning of this Court in holding that insurance was not commerce, and further predicted that in the future the Commerce Clause would not be given such a limited construction:

"The Senator from Missouri [Mr. Vest] spoke the other day about the difficulty of defining the word 'commerce,' especially as contained in the phrase 'interstate commerce.' I recollect one judicial decision upon this subject very definitely. The Supreme Court has decided that insurance is not commerce, and I suppose by following the circle of negations long enough and excluding all the things not commerce we should come at last to the residuum, which must be commerce or interstate commerce, because it can be nothing else. A fortiori, judging from this principle, I should myself have decided that transportation is not commerce nor interstate commerce either. ...

"I feel inclined to make the prediction, as one of the things to come in this vast domain, scarcely touched, of cases arising under the Constitution and laws of Congress, that the whole mass of merchantable paper known as negotiable by the law merchant, made at one place, negotiable at another, payable at another, transcending in its negotiation State lines, will be remitted to Congressional action, and with respect to its creation, its formation, its negotiation, with respect to all the rights and liabilities which may arise under it, the people, stunned with the eternal dissonance of conflicting decisions and judgments of forty-eight or fifty tribunals of last resort in the States upon the subject of interstate negotiable paper, will require Congress to act therein, and that, unconstitutional as I now deem it or think it, it will as a matter of necessity be done, and in any such legislation with respect to that paper, the whole bulk of it, the personal and peculiar conditions of litigants will not be inquired about, but simply whether the one party or the other is entitled to relief or liable to recovery against him by reason of being a party to interstate commercial paper, negotiable and payable and suable under the action of Congress which may finally take place upon that subject. ...

"Nor do I think with the Senator from New York that we are discharged from duty or released from our obligation to legislate upon the subject of trusts because the States have a right to do so." 21 Cong. Rec. 2556-2557.

And see Note 48, infra.

n46 Senator George, a member of the Senate Judiciary Committee which redrafted the Sherman Act before its final passage, stated on the floor of the Senate that, "The bill has been very ingeniously and properly drawn to cover every case which comes within what is called the commercial power of Congress. ... It is well known that the great evil of these combinations, these conspiracies, as they are called, these monopolies, as they are denominated by the bill, consists in the fact that by combination, by association, there have been gathered together the money and the means of large numbers of persons, and under these combinations, or conspiracies, or trusts, this great aggregated capital is wielded by a single hand and guided by a single brain, or at least by hands and brains acting in complete harmony and co-operation, and that in this way, by this association, by this direction of this immense amount of capital, by one organized will, to a very large extent, these wrongs have been perpetrated upon the American people." 21 Cong. Rec. 3147.

Earlier, Senator Sherman had explained, "I do not wish to single out any particular trust or combination. It is not a particular trust, but the system I aim at." 21 Cong. Rec. 2457. And in the House, Representative Stewart, delivering the last speech preceding the unanimous adoption of the present Act, stated "... The provisions of this trust bill are just as broad, sweeping, and explicit as the English language can make them to express the power of Congress over this subject under the Constitution of the United States. ..." 21 Cong. Rec. 6314.

Compare Kidd v. Pearson, 128 U.S. 1 and United States v. E. C. Knight Co., 156 U.S. 1, with Addyston Pipe & Steel Co. v. United States, 175 U.S. 211 and United States v. American Tobacco Co., 221 U.S. 106.

n47 Senator Sherman, explaining his bill to the Senate, stated, "It is to arm the Federal courts within the limits of their constitutional power that they may co-operate with the State courts in checking, curbing, and controlling the most dangerous combinations that now threaten the business, property, and trade of the people of the United States." 21 Cong. Rec. 2457.

Appellees further argue that, quite apart from what the Sherman Act meant in 1890, the succeeding Congresses have accepted and approved the decisions of this Court that the business of insurance is not commerce. They call attention to the fact that at various times since 1890 Congress has refused to enact legislation providing for federal regulation of the insurance business, and that several resolutions proposing to amend the Constitution specifically to authorize federal regulation of insurance have failed of passage. In addition they emphasize that, although the Sherman Act has been amended several times, no amendments have been adopted which specifically bring insurance within the Act's proscription. The Government, for its part, points to evidence that various members of Congress during the period 1900-1914 considered there were "trusts" in the insurance business, and expressed the view that the insurance business should be subject to the anti-trust [*560] laws. n48 It also points out that in the Merchant Marine Act of 1920 Congress specifically exempted certain conduct of marine insurance companies from the "antitrust" laws. n49

n48 For example, the following colloquy occurred in the House during the debate in passage of the Clayton Act:

"Mr. BARTON. We had an illustration recently where a big fire insurance company came into the State where local insurance companies have been doing business, not confined to the border of the State, and cut prices in that immediate locality until we had in three States 40 or 50 local companies put out of business, and then the price was put back where it was profitable to the company. Might not this same condition exist where we started a wholesale house in a State where their territory was confined to the State -- might it not be a reduction of prices for putting that institution out of business?

"Mr. WEBB. If the purpose is to wrongfully injure or destroy a competitor, this section will cover such practice; but insurance companies are not reached, as the Supreme Court has held that their contracts or policies are not interstate commerce.

"Mr. BARTON. Is it not right that they should come within the law?

"Mr. WEBB. Yes." 51 Cong. Rec. 9390.

So far as appears, this was the only mention of the insurance cases during the discussions leading to passage of the Clayton Act. And, as in 1890, when the Sherman Act was under consideration, the reference to these cases showed dissatisfaction with them. See note 45, supra.

n49 @ 29 (b), 41 Stat. 988, 1000.

The most that can be said of all this evidence considered together is that [**1178] it is inconclusive as to any point here relevant. By no means does it show that the Congress of 1890 specifically intended to exempt insurance companies from the all-inclusive scope of the Sherman Act. Nor can we attach significance to the omission of Congress to include in its amendments to the Act an express statement that the Act covered insurance. From the beginning Congress has used language broad enough to include all businesses, and never has amended [***1462] the Act to define these businesses with particularity. And the fact that several Congresses since 1890 have failed to enact proposed legislation providing for more or less comprehensive federal regulation [*561] of insurance does not even remotely suggest that any Congress has held the view that insurance alone, of all businesses, should be permitted to enter into combinations for the purpose of destroying competition by coercive and intimidatory practices.

[***HR13] Finally it is argued at great length that virtually all the states regulate the insurance business on the theory that competition in the field of insurance is detrimental both to the insurers and the insured, and that if the Sherman Act be held applicable to insurance much of this state regulation will be destroyed. The first part of this argument is buttressed by opinions expressed by various persons that unrestricted competition in insurance results in financial chaos and public injury. Whether competition is a good thing for the insurance business is not for us to consider. Having power to enact the Sherman Act, Congress did so; if exceptions are to be written into the Act, they must come from the Congress, not this Court. And as was said in answer to a similar argument that the Sherman Act should not be applied to a railroad combination:

"It is the history of monopolies in this country and in England that predictions of ruin are habitually made by them when it is attempted, by legislation, to restrain their operations and to protect the public against their exactions. ...

"But even if the court shared the gloomy forebodings in which the defendants indulge, it could not refuse to respect the action of the legislative branch of the Government if what it has done is within the limits of its constitutional power. The suggestions of disaster to business have, we apprehend, their origin in the zeal of parties who are opposed to the policy underlying the act of Congress or are interested in the result of this particular case; at any rate, the suggestions imply that the court may and ought to refuse the enforcement of the provisions of the [*562] act if, in its judgment, Congress was not wise in prescribing as a rule by which the conduct of interstate and international commerce is to be governed, that every combination, whatever its form, in restraint of such commerce and the monopolizing or attempting to monopolize such commerce shall be illegal. These, plainly, are questions as to the policy of legislation which belong to another department, and this court has no function to supervise such legislation from the standpoint of wisdom or policy. ..." Harlan, J., Affirming decree, Northern Securities Co. v. United States, 193 U.S. 197, 351-352. The argument that the Sherman Act necessarily invalidates many state laws regulating insurance we regard as exaggerated. Few states go so far as to permit private insurance companies, without state supervision, to agree upon and fix uniform insurance rates. Cf. Parker v. Brown, 317 U.S. 341, 350-352. No states authorize combinations of insurance companies to coerce, intimidate, and boycott competitors and consumers in the manner here alleged, and it cannot be that any companies have acquired a vested right to engage in such destructive business practices. n50

n50 Whether reliance on earlier statements of this Court in the Paul v. Virginia line of cases that insurance is not "commerce" could ever be pleaded as a defense to a criminal prosecution under the Sherman Act is a question which has been suggested but one it is not necessary to discuss at this time.

Reversed.

MR. JUSTICE ROBERTS and MR. JUSTICE REED took no part in the consideration or decision of this case.

DISSENTBY: STONE; FRANKFURTER; JACKSON (In Part)

DISSENT:

[**1179] MR. CHIEF JUSTICE STONE, dissenting:

[***1463] This Court has never doubted, and I do not doubt, that transactions across state lines which often attend and are incidental to the formation and performance of an insurance contract, such as the use of facilities for interstate [*563] communication and transportation, are acts of interstate commerce subject to regulation by the federal government under the commerce clause. Nor do I doubt that the business of insurance as presently conducted has in many aspects such interstate manifestations and such effects on interstate commerce as may subject it to the appropriate exercise of federal power. See Polish Alliance v. Labor Board, post, p. 643.

But such are not the questions now before us. We are not concerned here with the power of Congress to do what it has not attempted to do, but with the question whether Congress in enacting the Sherman Act has asserted its power over the business of insurance.

The questions which the Government has raised, advisedly it would seem (cf. New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495, 499), by the indictment in this case, as it has been interpreted by the District Court below, are quite different from the question, discussed in the Court's opinion, whether the incidental use of the facilities of interstate commerce and transportation in the conduct of the fire insurance business renders the business itself " commerce" within the meaning of the Sherman Act and the commerce clause. The questions here are whether the business of entering into contracts in one state, insuring against the risk of loss by fire of property in others, is itself interstate commerce; and whether an agreement or conspiracy to fix the premium rates of such contracts and in other ways to restrict competition in effecting policies of fire insurance, violates the Sherman Act. The court below has answered "no" to both of these questions. I think that its answer is right and its judgment should be affirmed, both on principle and in view of the permanency which should be given to the construction of the commerce clause and the Sherman Act in this respect, which has until now been consistently adhered to by all branches of the Government.

[*564] The case comes here on direct appeal by the Government from the District Court's judgment dismissing the indictment. Under the provisions of the Criminal Appeals Act, 18 U. S. C. @ 682, the only questions open for decision here are whether the District Court's constructions of the commerce clause and of the Sherman Act, on which it rested its decision, are the correct ones. United States v. Borden Co., 308 U.S. 188, 193; United States v. Wayne Pump Co., 317 U.S. 200, 208; United States v. Swift & Co., 318 U.S. 442, 444.