State Ex Rel. Barrett v. Boeckeler Lumber Co.

This is an original proceeding in quo warranto. On July 7, 1921, the Attorney-General filed his information which, with caption and signatures omitted, is as follows: "Comes now the State of Missouri, by Jesse W. Barrett, Attorney-General, who in this behalf prosecutes for and in the name of the State of Missouri, and informs the court that the respondent Goodfellow Lumber Company is a corporation duly organized and existing under and by virtue of the laws of the State of Iowa; that the respondent St. Louis Lumber Company is a corporation duly organized and existing under and by virtue of the laws of the State of Maine; that said corporations are, and at all times herein mentioned were, engaged in the business of manufacturing, buying and selling lumber and are, and at all times herein mentioned were, duly authorized and licensed to do business in the State of Missouri as foreign corporations. "Relator informs the court that the respondents Boeckeler Lumber Company, Clayton Lumber Company, Cherokee Lumber Company, Louis Essig Lumber Company, Ganahl Lumber Company, S.J. Gavin Lumber Company, Phillip Gruner Brothers Lumber Company, *Page 460 Holekamp Lumber Company, Mound City Lumber Company, O'Neill Lumber Company, Prendergast Lumber Company, H.E. Rapp Lumber Company, Julius Seidel Lumber Company, Shellabarger Lumber Company, Vandeventer Lumber Company, Wiles-Chipman Lumber Company, Wilson Land Lumber Company, and St. Louis Lumber Trade Exchange are now, and at all times herein mentioned were, corporations duly organized and existing under and by virtue of the laws of the State of Missouri, and engaged in the business of manufacturing, buying and selling lumber. "Relator informs the court that respondents have created, entered into, become members of and participated in a pool, trust, agreement, combination, confederation and understanding among themselves and with each other which tends to and does result in the restraint of lawful trade and full and free competition in the manufacture and sale of lumber in this State, with the purpose, design and view to regulate, control and fix the price of lumber, to maintain such price when so regulated and fixed, to fix the amount and quantity of lumber bought and sold and to lessen lawful trade and full and free competition in the manufacture of lumber in this State, all to the great detriment and damage of the purchasing public and the people of the State of Missouri. "Relator further states that by reason of the participation of said respondents in the pool, trust, agreement, combination, confederation and understanding as herein stated, and by reason of the acts and things done by respondents as herein set forth, said respondents have been guilty of illegal, willful and malicious perversion and abuse of the franchises, licenses and authority severally granted to them by the State of Missouri, and illegal and unlawful usurpation of privileges, franchises and authorities not granted to them by the State of Missouri. "Wherefore, the Attorney-General, prosecuting in this behalf for the State of Missouri, prays the consideration of the court in the premises, and that each respondent corporation may be excluded from all corporate *Page 461 rights, privileges and franchises exercised or enjoyed by it under the laws of the State of Missouri, and that its franchise, license and certificate to do business in this State be declared forfeited, and that all or such portion of its property as the court may deem proper, be confiscated into the State, or in lieu thereof, a fine be imposed upon it in punishment of the perversion, usurpation, abuse and misuse of its franchise or license as herein described." On the same day this court made an order reciting the substance of the charges contained in said information and requiring respondents to appear on July 28, 1921, and show by what warrant they abuse the franchises, licenses and authority granted them by the State of Missouri and by what warrant they usurp privileges, franchises and authority not granted to them by the State and to show cause why said respondents should not be excluded from all corporate rights, privileges and franchises and their franchises, licenses and certificates to do business in this State should not be declared forfeited and judgments of fine or confiscation should not be imposed upon them. On July 15, 1921, respondents waived service of said order and entered their appearance. On July 28, 1921, after having unsuccessfully moved to require relator to make the information more definite and certain, respondents filed their joint and several answer and return which, with caption and signatures omitted, is as follows: "The respondents in the cause above entitled for their joint and several answers to the information of the Attorney-General of the State of Missouri heretofore filed in this court in said cause, and for their return to the order of the court to show cause why the judgment demanded by the relator should not be rendered, admit that the Goodfellow Lumber Company is a corporation organized and existing under and by virtue of the laws of the State of Iowa, and that the St. Louis Lumber Company is a corporation organized and existing under the laws of the State of Maine; admit that said two corporations *Page 462 are now and have been engaged in the business of buying and selling lumber, and are and have been duly authorized and licensed to do business in the State of Missouri as foreign corporations, "Respondents admit the Boeckeler Lumber Company, Clayton Lumber Company, Cherokee Lumber Company, Louis Essig Lumber Company, Ganahl Lumber Company, S.J. Gavin Lumber Company, Phillip Gruner Brothers Lumber Company, Holekamp Lumber Company, Mound City Lumber Company, O'Neill Lumber Company, Prendergast Lumber Company, H.E. Rapp Lumber Company, Julius Seidel Lumber Company, Shellabarger Lumber Company, Vandeventer Lumber Company, Wiles-Chipman Lumber Company, Wilson Land Lumber Company, and St. Louis Lumber Trade Exchange are now and have been corporations duly organized and existing under and by virtue of the laws of the State of Missouri, and, excepting the St. Louis Lumber Trade Exchange, are engaged in the business of buying and selling lumber. "Respondents deny that they or any of them are engaged in the business of manufacturing lumber. "Respondents deny that they or any of them have created, entered into, become members of, or participated in any pool, trust, agreement, combination, confederation or understanding among themselves or with each other or among or with any two or more of them, which tends to or does result in the restraint of lawful trade or of full and free competition in the manufacture or sale of lumber in this State; deny that respondents or any of them have created, entered into, become members of or participated in any pool, trust, agreement, combination, confederation, or understanding among themselves or with each other, or among or with any two or more of them, with the design and view to regulate, control or fix the price of lumber; deny that said respondents or any two or more of them have created, entered into, become members of or participated in any pool, trust, agreement, combination, confederation or understanding to *Page 463 maintain the price of lumber in this State as regulated or fixed by respondents or any of them; and respondents again deny that they or any of them have fixed or regulated or have attempted to fix or regulate the price of lumber in this State by any pool, trust, agreement, combination, confederation or understanding among themselves or any of them. "Respondents deny that they or any of them have created, entered into, become members of or participated in any pool, trust, agreement, combination, confederation or understanding with the purpose, design or view to fix the amount of lumber bought or sold in this State, or any part thereof, or to lessen full and free competition in the manufacture and sale of lumber in this State. "Respondents further deny that by reason of their participation or the participation of any of them in any pool, trust, agreement, combination, confederation or understanding, or by reason of any acts or things done by respondents or any of them, as set forth and alleged in said information, or in any other manner whatsoever, respondents or any of them have been guilty of willful or malicious perversion or abuse of any franchise, license or authority granted to them or any of them by the State of Missouri, or that they have been guilty of an illegal usurpation of any privilege, franchise or authority not granted to them by said State. "Wherefore, having fully answered the information of the relator, and shown cause why no judgment of ouster or other judgment should be rendered against respondents or any of them, respondents pray that they may be dismissed with their costs." On August 1, 1921, Honorable D.W. SHACKLEFORD was appointed by this court as special commissioner to take testimony in the case, with full power to compel attendance of witnesses, production of papers, books and other documents, to issue attachments therefor and to hear and determine all objections to testimony and to admit or exclude the same in the same manner as the court might in the trial of the case before the court, *Page 464 and to report the testimony and his proceedings therein to the court. After the special commissioner qualified as required by law, the taking of testimony was begun before him on September 9, 1921, and continued from time to time until same was completed, and on March 22, 1922, said special commissioner filed his report in this court, accompanied by a transcript of the evidence heard by him. The case has been briefed and argued and is thus before us for determination. The respondents, except the St. Louis Lumber Trade Exchange (hereinafter referred to as the "Exchange") are corporations of this and other states, engaged in the retail lumber business in the city of St. Louis. The Exchange was incorporated by proforma decree of the Circuit Court of the City of St. Louis, and a certificate of incorporation was issued to it by the Secretary of State on July 20, 1917. It has no capital stock, is not a profit-sharing corporation and is not engaged in the retail lumber trade. All of the other respondents are members of the Exchange and engaged in the retail lumber business in the city of St. Louis. Certain unincorporated members of the Exchange were not made parties respondent. Prior to the incorporation of the Exchange, twenty-three lumber dealers of St. Louis had signed a memorandum of agreement for the organization of a voluntary association of lumber dealers, known as the "Lumber Dealers Association of St. Louis" (hereinafter referred to as "new association"). Most, if not all, of these signers afterwards became members of the Exchange. The constitution and by-laws of the new association were adopted as the constitution and by-laws of the Exchange, and the officers and directors of the new association became the first officers and directors of the Exchange and it assumed the obligations of the new association. For a number of years (just how long is not clear), there had been in existence in St. Louis a voluntary association of retail lumber dealers, known as the "Retail Lumber Dealers' Association." We will hereafter refer to it as the "old association." *Page 465 We quote from respondents' brief as follows: "Said old association, according to all the testimony relating to it, was mainly an auditing body, but for a period of four months during 1912 the members of it agreed on uniform sales prices, and, becoming alarmed about the legality of that practice, destroyed the records of it. Except as regards said period of four months in 1912, so far as the evidence shows, the old association, throughout the years of its life, did nothing reprehensible. Neither tried to fix prices or to limit competition. An effort was made by the State to prove the adoption by the St. Louis Lumber Trade Exchange of the constitution and by-laws of the Lumber Dealers' Association was an adoption of the constitution and by-laws of said old association, but the evidence conclusively shows the old association never had any constitution and by-laws, and that it had passed out of existence prior to the formation of the Lumber Dealers' Association in March, 1917, which subsequently became the St. Louis Lumber Trade Exchange. The old association `had died of the dry rot,' some of the witnesses said, and others that it had ceased to function. At any rate, it had no connection with the voluntary association formed in March, 1917, as both the call for the meeting to form said new association and the memorandum of agreement signed by the dealers who went into it show." CONTENTIONS OF THE PARTIES. The contention of relator may be briefly presented by quoting a paragraph from his brief: "From the evidence we shall show that the prime purpose of this admitted combination of the Lumber Companies was to increase retail lumber prices and thereby profits, which end the respondents designed to and did accomplish by the elimination of competition. We shall show that they were able to achieve this result by reason of a practical monopoly of the lumber business of St. Louis. We shall outline the origin of the combination, for the light it will throw on its general purposes. It *Page 466 will appear that the present organization is but the outgrowth of an earlier association of respondents, with the same general unlawful objects. It will be pointed out how this earlier association tended to disintegrate by reason of the inadequacy of the means employed by it to stifle competition and discipline its members. What steps were taken to overcome this weakness with the re-formation of 1917 will be indicated, how withdrawal was made practically impossible, how the slightest departure from the agreement in any of its details was penalized by fines, for the enforcement of which a court and even a court of appeals were established within the organization. The elaborate machinery through which the combine functions, how one dollar at first and later seventy-five cents per thousand feet of lumber sold was added to the retail price and paid by the consuming public for the sole purpose of providing the $75,000 annual budget of the Lumber Trade Exchange will be shown from the evidence. It will be shown also that by means of their agreement to limit competition and fix prices the respondents have been able to and have mulcted the home builders and lumber users generally in St. Louis and vicinity of an amount between two and one-half million and five million dollars." It is the contention of respondents that there was "the utmost good faith on the part of the Exchange and its members in all that was done by them; they acted under the advice of competent legal counsel, and endeavored earnestly to obey the law;" that the chief purpose of the organization of the new association and the Exchange was to abolish certain trade abuses and to protect both the public and the dealers by bringing about honest methods of business; that another object of the Exchange was to disseminate information among the dealers, to educate them as to cost accounting and to introduce more efficient and economical methods and thereby reduce the price of lumber to the public. "There was no intention to fix selling prices, except to preventsales below the cost of the replacement of material and thehandling of the business. There was no intention to *Page 467 diminish legitimate competition or restrain trade. The evidence shows that the actual cost to a dealer of carrying on his business is difficult to figure out, and can only be done accurately by experts. Moreover, that the expense to an individual dealer of employing an expert to ascertain the cost of his business would be prohibitive." (Italics ours). Respondents further contend that "the effect of determining the system of cost accounting in that manner was to coerce the less economical yards into introducing better and more economical methods, which resulted in lower prices to the public. A survey of the yards in order to determine the service charge was made every three months, and was based on the business of the aforesaid efficient yards during the preceding twelve months; that is to say, every three months there would be a new survey made covering twelve months down to the date of the last survey, and leaving out the first three months of the preceding survey." It is contended "that only by the agreement that the expense of the business be added to the cost of the material in making sales, could the trade abuses and dishonest practices be eliminated from the lumber business; that, otherwise, some dealers would sell below cost and reimburse themselves for the loss by substitution of grades, giving rebates and in the other ways we have stated." Respondent says that "although the members were required to add the cost of the business to the cost of replacement of material in selling, they were free to add what profit they pleased. It should be stated that the requirement of the `service charge' was not enforced after January, 1920. Certain fines were imposed after that date for violations prior to it, but all fines subsequently imposed were refunded. This was done on the advice of Mr. Collins, of counsel for the Exchange; not because he deemed the service charge unlawful (for he reiterated in giving this advice that he considered it perfectly lawful), but because he thought the members had been sufficiently educated as to the necessity, if trade abuses were to be *Page 468 kept down, of adding the expense of the business to the cost of their material in selling, to no longer require the enforcement of the rule by penalties." Respondents further say that: "Under the rules of the Exchange, members were required to file with the Exchange their bids on lumber, and sellers were required to file reports of their sales and the prices. These estimates or bids and the sale prices were secret and not exposed to inspection by the members of the Exchange, except that, after a sale had been made, the sale prices might be examined by dealers who had competed for the bill. The objects of these regulations were the protection of the public against any mistakes in calculations or fraud in delivering the quantities and grades which had been sold. The testimony is that mistake in extensions were frequently made by dealers. For example, in bidding on so many thousand feet, at so much a thousand, errors in calculation were often detected and corrected; and the Exchange provided in its by-laws for a system of inspection, whereby if any contractor or proprietor complained of not receiving the quantity or quality of lumber bought, the Exchange sent an inspector to examine the deliveries and report in accordance with the facts. "There were certain provisions of the Exchange which were recommended to the members as good business methods to follow, but were never enforced by the imposition of penalties. They were merely considered sound business practices. These regulations were not to extend credit for more than thirty days; not to release liens on a building until the lumber bills were paid; not to take mortgages for a bill in lieu of the statutory lien, except to secure a bad debt; not to advance money to contractors to meet their payrolls, and not to give discounts of more than two per cent for cash payment. "A trade journal, giving quotations of wholesale prices in the lumber trade (a journal similar to those published in connection with all lines of business), was subscribed for and taken by the Exchange and by every *Page 469 member of it. The members got their information as to wholesale prices from this journal, subscribed for, as said, by them individually. The Exchange, for the convenience of the members, sent them from time to time notices of the changes in wholesale prices; that is, the fluctuations, and this was the extent of the activity of the Exchange in that way. The evidence shows without question that the quotations of wholesale prices in said journal, known as `Lumber,' were reliable and accurate. Neither the Exchange nor any member of it has any interest in the publication or ownership of this journal and no connection with it, except as a subscriber. "The evidence shows that, instead of the Exchange or its regulations having fixed prices of lumber in St. Louis and vicinity, or having lessened competition or restrained trade, they have done neither; that they have increased competition even among the members of the Exchange. They have accomplished this result by ridding the business of practices which often deterred dealers from competing for sales." In brief, respondents contend that, as the result of the organization and activities of the Exchange, competition between its members and non-members has not been lessened; that prices were not fixed; that prices quoted among members varied sometimes as much as twenty-five per cent; that the use of lumber increased because of the elimination of trade abuses; that the effect of the activities of the Exchange was good. Respondents contend (and we think the evidence so shows) that the retail price of lumber has been lower in St. Louis than in other places, particularly in territory close to St. Louis. They contend that the rise and fall of the retail price only followed the rise and fall in wholesale prices; that building operations in St. Louis have been curtailed by demands of labor and mechanics for high wages, rather than by the high price of lumber; that during nine months of 1919 the Federal Government fixed the maximum price of lumber and respondents were not responsible for uniformity occurring during that *Page 470 period; that the rise in price of lumber was general and due to World War conditions and to freight rates. "The Lumber Trade Exchange has never included in its membership many of the retail dealers in St. Louis, but its members have constantly been in competition with non-member concerns as well as with each other. "In their dealings with non-members, the members of the Exchange have always sold to the non-members, and at the same prices they sold to each other; not discriminating at all. The only witness who intimated to the contrary was Darlington, an enemy of the Exchange. They were advised to do this by counsel and followed the advice." To arrive at a correct conclusion concerning the facts, we are compelled to set out much of the testimony and refer to exhibits somewhat at length. It is our duty to weigh the evidence for ourselves and make an original finding of facts, since the special commissioner had no authority to and did not make any recommendation to us concerning the facts in the case. ARTICLES OF ASSOCIATION, RULES AND BY-LAWS. It seems necessary to a proper understanding of the case to set out in full the articles of association and the preamble to the by-laws and the supplement thereto and to make extensive quotations from the by-laws of the Exchange. These are taken from relator's Exhibit 1, identified by President Boeckeler. There is some confusion caused in our minds by the further introduction later on in the record of articles of association, preamble and by-laws. As we understand the record, the second offering (relator's Exhibit 3) introduced in evidence earlier by-laws, and relator's Exhibit 1 covered the articles of association, preamble, supplement to preamble and by-laws in force when this suit was begun, and unless otherwise indicated herein our reference to the articles of association and by-laws is to those found in relator's Exhibit 1. *Page 471 "ARTICLES OF ASSOCIATION OF ST. LOUIS LUMBER TRADE EXCHANGE. "ARTICLE I. "Know all men by these presents that the persons whose names are hereto appended and their associates, constituting the present membership of the organization known as the Lumber Dealers' Association of St. Louis, do hereby associate themselves together for the purpose hereinafter named and under and by the name of the `St. Louis Lumber Trade Exchange,' and by this name it shall have corporate succession by and through the members named herein and their associates and successors for a period of fifty years; and as such St. Louis Lumber Trade Exchange it may sue and be sued, complain and defend in any court of law or equity, have a common seal and alter same at pleasure, and receive and hold, for the purpose of its creation, property real and personal, by gift, devise or purchase, and mortgage or dispose of same by sale, lease or otherwise. "ARTICLE II. "The purpose of the corporation hereby created shall not be to conduct any business, whatever, for pecuniary profit, but generally to advance the commercial interests of the city of St. Louis, especially in respect to the trade in lumber and its allied products; to inculcate just and equitable principles of trade; to establish, maintain and enforce uniformity in commercial usages; to acquire, possess and disseminate useful business information; to adjust and settle in a proper and equitable manner, controversies, disputes and differences that may arise between its members, or between them and their clients; to appoint graders and inspectors of lumber and lumber products; to encourage wise and useful legislation; to protect and promote generally the interests of the lumber trade and the individuals engaged therein; and finally, to facilitate in every way possible the transaction *Page 472 of all legitimate business between members or between them and others. "ARTICLE III. "The corporation may from time to time, in furtherance of the purposes of its creation, make and adopt such rules; regulations and by-laws, as may be deemed needful and proper, and possess all other general powers incident to corporations of this class under the laws of this State. "ARTICLE IV. "The present officers and directors of the Lumber Dealers' Association of St. Louis as now constituted shall continue to be officers and directors of the corporation hereby created until, by the provisions of said rules, regulations and by-laws, the respective terms of said officers and directors shall regularly expire or be vacated, when their successors shall be elected as therein provided. "ARTICLE V. "The officers and directors of the Lumber Dealers' Association of St. Louis, as now constituted, and who become the officers and directors of the corporation hereby created under the rules, regulations and by-laws, are as follows: "President ..................... Richard E. Gruner "Vice-President ................ John A. Rehies "Treasurer ..................... Louis Essig "Directors. "Adolph Boeckeler John G. Ganahl "Julius Seidel Joseph O'Neil "ARTICLE VI. "The rules, regulations and by-laws of the Lumber Dealers' Association of St. Louis, as now constituted, shall continue to be the rules, regulations and by-laws of the corporation hereby created, until the same shall be regularly repealed or altered in the manner herein provided. *Page 473 "ARTICLE VII. "The corporation hereby created shall have no capital stock, and the custody and control of its property shall be vested in its board of directors as provided in its rules, regulations and by-laws. "ARTICLE VIII. "The contractual obligations of the Retail Dealers' Association, as now constituted, shall be, and are, by these articles, assumed by the corporation hereby created. "ARTICLE IX. "The corporation hereby created shall have power, under the rules, regulations and by-laws, as adopted, to punish any members guilty of a violation of such rules, regulations and by-laws, by a fine of not more than $500, or by suspension or expulsion, the right to a trial being always accorded. (Signed) "President .............. Richard E. Gruner "Vice-President ......... John A. Reheis "Treasurer .............. Louis Essig "Directors. "Adolph Boeckeler John G. Ganahl "Julius Seidel Joseph O'Neil. "On this 15th day of June, 1917, before me personally appeared R.E. Gruner, John A. Reheis, Louis Essig, A. Boeckeler, Julius Seidel, John G. Ganahl and Joseph O'Neil, to me known to be the persons above described, and acknowledged the same as their free act and deed. (Signed) "GOLDA N. DAHLING, "Notary Public, City of St. Louis. "My Commission expires April 8, 1918." "PREAMBLE" (As Originally Adopted.) "There is no business activity in the city of St. Louis that holds such vital relation to the community's welfare as does the retail lumber trade. *Page 474 "Assembling of Stocks. — Due to modern building conditions the retail lumber merchant must keep in stock a great variety of the various kinds of manufactured lumber products. From every forest region of the nation he draws his supply. To meet the multiplied necessities of a great and growing community he must keep on hand a large supply of commercial sizes, and these of every grade. "Fir, cedar and spruce from Washington and Oregon; redwood from California; yellow pine, cypress, cedar and oak from the Southern States; hemlock and hardwoods from the lake region, and other woods from distant points must be ready for instant delivery, and this from one single piece of two-by-four up to many thousands of feet. "The modern retail lumber merchant runs a lumber product department store. His goods are open to inspection of buyer and tax collector. "Competitive Conditions. — Although this merchant class is a prime need to the city's growth and progress, it labors under a ruinous handicap of competitive warfare. "Lumber products are purchased by the dealers from the manufacturers, on an open market, at prices fixed by the law of supply and demand, with the added factor of uncertainty of car supply, and exigencies of transportation. "Due to sharp and eager competition stocks must be maintained at the highest point in size and quality. "Secret Rivalry. Although the dealers buy on an open market they are obliged to, and do, sell in secret rivalry. "Lumber as a rule is sold at retail on estimates submitted by contractors' architects and the speculative builders. A dealer bids in ignorance of the quantity, quality or the prices quoted by his competitor. He is ever at the mercy of the buyer. Due to this situation, unfair trade practices frequently develop, with the result that the lumber merchant frequently disposes of *Page 475 his stock at less than actual cost. Seldom does the consumer, himself, receive any benefit from such unnatural trade conditions. In fact the public is in no wise benefited, but quite frequently suffers loss due to the fact that the dealer, squeezed by the tricky buyer, seeks to make up his loss from the frank and honest purchaser. The greatest evil in the business is the furtive and secret method employed in selling lumber and in jealously guarding prices after sale. Due to this situation many evil practices have attached themselves to the lumber business, practices hurtful alike to the consuming public and trade itself. "Rebates; short measure off grades; substitutes as to species; cut-throat prices; bitter and hurtful suspicion; lack of knowledge of trade conditions; waste and inefficiency — all are the natural outgrowth of present business methods. Public interest and trade welfare require that these conditions be overcome and eliminated. "On every hand there is going forward a movement to correct trade abuses and to put the business of the nation on a more sane, efficient and economic basis. Those from whom lumber retail dealers must buy have organized their industrial processes, and now sell their output with full knowledge of market conditions. Notable examples are the manufacturers of yellow pine, cypress, redwood, hemlock and hardwoods. "It is the desire of the St. Louis lumber merchants to now organize, and this to the end that trade abuses may be eliminated. In undertaking this movement it is the earnest and honest purpose of those who unite in this co-operative work to do nothing that will in the least impinge upon the prohibitions of the law, but in all things to keep themselves within its limitations. To this end the following by-laws are hereby adopted." (Note: The by-laws then adopted have been superseded by those following "Supplement to Preamble" herein). *Page 476 "SUPPLEMENT TO PREAMBLE." (Adopted January 14, 1920.) "The members of St. Louis Lumber Trade Exchange, in a meeting duly called and held for the purpose of amending the by-laws and the preamble thereto, make the following declarations: "The original preamble to the by-laws was drawn and adopted with particular reference to the retail lumber trade in the city of St. Louis; what is stated therein applies with equal force to the wholesale lumber trade, and all classes of transactions in the merchandising of lumber and its allied products, whether deliveries to purchasers are made through direct shipments from mills, or in railroad cars from the yards of the dealers, or by wagon or truck or otherwise; and what is stated therein also applies with equal force in the entire territory of what may be termed `Greater St. Louis' as distinguished from the city of St. Louis as confined by its corporate limits, and by which is meant the industrial territory composed not only of the city of St. Louis, but also the counties, cities and towns which are nearby or contiguous thereto, and which are served by the lumber merchants of St. Louis and of such industrial territory. "The experience of the Exchange has demonstrated clearly that the interests of the lumber trade and of the public will be better served by amending the by-laws to permit admission to membership in the Exchange of lumber merchants engaged in business anywhere within the larger industrial territory of `Greater St. Louis.' "Accordingly, the members of the St. Louis Lumber Trade Exchange do hereby re-affirm and approve the principles expressed in the original Preamble as having a wider territorial application and as being applicable to transactions of every kind where sales of lumber and allied products are made to the consumer, without respect to the method employed of making delivery. "The constitution and by-laws of the Lumber Dealers' Association of St. Louis having heretofore been repealed and other by-laws adopted, the following by-laws *Page 477 for the government of the St. Louis Lumber Trade Exchange are now hereby adopted, any portion or portions of former by-laws inconsistent herewith being hereby repealed." Article I, section 1 of the by-laws prescribes qualifications of members and admission to membership on majority vote of the board of directors. It provides for a membership fee of one thousand dollars and acceptance by the member of the by-laws, rules and regulations of the Exchange. Section 3 makes attendance of the member or alternative representative (provided for in section 2) compulsory at all regular and annual meetings, under penalty of such fine or other disciplinary action as the board of directors may prescribe. Section 4 provides for resignation of members, but it takes six months for a member to get out of the organization, during which time all dues, fines and assessments must be paid. The six months period was fixed, as suggested by General Boyle, for cooling time and to give the member opportunity to change his mind. Section 5 authorizes expulsion of members on two-thirds vote of the entire board of directors, with forfeiture of membership. Article II is devoted to the rules governing membership meetings. Article III, section 1, provides that each member of the Exchange shall pay as monthly dues a sum equal to one dollar on each one thousand feet of lumber (or its equivalent in other merchandise) sold during each preceding month in the territory in which the Exchange functions for the purpose of operating the Exchange and carrying forward its work, "particularly along the lines of education, publicity and other activities of benefit to the lumber trade and to the community." (NOTE: The dues were later reduced to seventy-five cents per thousand feet). Article IV covers the subject of nominations and election of officers, and throws no particular light upon the character of the Exchange or its activities. *Page 478 Article V, section 1, vests the government and powers of the Exchange in its board of directors, except only as to powers vested in the board of arbitration and board of appeals. Sections 2 and 3 prescribe the powers and duties of the board of directors. Among other things: "it shall judge of the qualifications of any person applying for membership after having considered the report of the membership committee. It shall have supervisory control and direction over the management and affairs of the Exchange except as otherwise provided in these by-laws. It shall determine the policies of the Exchange. Its judgment shall be final as to what fund or funds may or shall be accumulated and how it shall be applied to the work of the Exchange, particularly along the line of education, publicity and other activities of benefit to the lumber trade and to the community. It shall generally do such other proper, useful and needful things as in its judgment may tend to promote the usefulness of the Exchange and carry out the purposes of the organization." The remainder of Article V is devoted to meetings of the board, quorum, time and place thereof, vacancies, etc. Article VI deals with officers and their duties. Among the duties of manager, it is prescribed that "he shall keep the records and reports of all cases before the board of arbitration and the board of appeals; he shall cite persons to appear and give testimony in such cases; he shall conduct correspondence of the Exchange and shall perform such other duties as the directors from time to time may prescribe." Article VII is entitled "Arbitration." Sections 1 and 2 provide for the qualifications of six members of the board of arbitration, its organization, rules, presiding officer, etc. Section 3 covers the manner of filing charges against members for "default, misconduct or offense, in violation of the by-laws or rules of the Exchange." Section 4 provides for the procedure in trials, and authorizes trial in the absence of the "defendant." Section *Page 479 5 authorizes suspension of, or imposition of penalties upon, any duly notified member neglecting or refusing to appear and testify at any hearing or refusing to answer questions deemed to be proper by the board of arbitration. Under this section a defendant apparently can be compelled to testify against himself. Sections 6, 7, 8 and 9 provide for notice of the suspension of the member, reinstatement, rehearings and for right of appeal (not unlike proceedings in court). Article VIII creates a board of appeals, independent of the board of arbitration, for its organization, rules, disqualification of its members and vacancies therein. Its procedure is prescribed in a subsequent article. Article IX covers the subject of payment of fines and penalties. Article X deals with the rules governing conduct of trials. It is unnecessary to go into details. It provides for testimony under oath by witnesses. Hearsay testimony may be admitted if deemed to be in the interest of justice and to be reliable. No accused person can be represented by an attorney at law. Decisions of the board of arbitration must be in writing and filed with the manager of the Exchange. Article XI specifies the different committees and defines their duties. Such committees include executive-membership, auditing and finance committees, with duties ordinarily common to such. In addition, section 7 provides for the appointment of a number of standing committees, named by the president. They include committees on "civic welfare," "trade ethics," "market conditions," "cost accounting and standardization of methods," "credits," "standards of credits," "labor conditions," "entertainment" and "education." No good purpose can be served by setting out the duties of all the standing committees. Only those deemed of interest or importance in determining the issues before us will be noticed. The committee on cost accounting and standardization of methods is charged with the duty of undertaking *Page 480 "the study and analysis of scientific cost data in order that the members may adopt at the earliest possible moment a standard method of accounting for the purpose, not only of educating the members in the results of their own operations, but to facilitate, also, the important functions of co-operative trade research. This committee shall make investigation as to the efficiency of methods prevailing in this market as regards the services rendered the buying public, in order that, through the medium of co-operative study, the members of the Exchange may improve their facilities and an efficient and economical standard of service may be established. "The committee on credits shall devote its efforts to a careful study of the general principles of credit, and the investigation of credit conditions in this market as applied to the building material trade. It shall also undertake such other important functions in the matter of credit control as the board of directors may, from time to time, provide." The standing committees are charged with the duty of preparing monthly and annual reports showing the results of their activities. Article XIV on "trade ethics" is quoted in full: "Whereas, for years past, many practices, inimical to the best interests of the trade, as well as to the public generally, have developed; and "Whereas, such practices tend to create distrust and suspicion among dealers in lumber products and in the minds of the consumers of such products, and in the minds of the public; and "Whereas, this condition has seriously interfered with the efficient and economical distribution of lumber products in this market; and "Whereas, it is the chief object of the Exchange to inculcate just and equitable principles of trade, now, therefore, "BE IT RESOLVED, That this Exchange condemns all such pernicious practices, and in particular: *Page 481 "1. Substitution of inferior grades. "2. False tally, or measurement. "3. Submission of fictitious bids or estimates. "4. Collusion with contractors, buyers, competitors or others, for the purpose of suppressing honest, open competition. "5. Conduct tending to discredit competitors in the minds of the purchasers of lumber products. "Unethical Trade Practices Forbidden. — To the end that such evils may be eliminated from this market, and in order that this Exchange may effectively insure upright conduct at all times, on the part of its members in their relations to competitors and to the consumers of lumber products, the following sections are hereby adopted: "Sec. 1. Substitution of Grades. — Any substitution of grades, without knowledge and consent of the purchaser, is positively prohibited. "All grades shall be specifically indicated when submitting bids or estimates. Failure on the part of the prospective purchaser to mention grades, when inquiring for quotations, shall not entitle the bidder to disregard this section. "Sec. 2. Fictitious Bids. — Every bid or estimate, made by a member of this exchange, shall be submitted in good faith, and with the full intention of complying, in every respect, with the terms of such bid, or estimate, in the event said member may be awarded the business. The submission of fictitious or straw bids, or any other secret agreements with prospective purchasers for the purpose of obtaining an unfair advantage over competitors, is prohibited. "Sec. 3. Secret Rebates. — The practice of giving commissions or secret rebates to contractors or buyers or others interested directly or indirectly, in the purchase of lumber products, is contrary to the principles of the Exchange and is forbidden. *Page 482 "Sec. 4. Solicitors. — All salesmen or solicitors employed by members of this Exchange, shall be governed by the rules of this Exchange. "Sec. 5. Principal Responsible for Employees. — Members shall, under the rules and regulations, be responsible for the acts of their salesmen, solicitors or other employees or their representatives. (See also Article I, Section 2). "Sec. 6. Interference With Closed Sales. — No member of this Exchange, taking advantage of a lowered market, or other causes in his favor, shall after business has been placed with a competitor, solicit or otherwise seek to take away such business from the same competitor. "Sec. 7. Upright Conduct. — In order that the principles represented by this Exchange may command the respect and appreciation of the community, it devolves upon all members at all times to conduct themselves in their relations to their fellow-members in a fair and upright manner. No exceptions to this rule can be tolerated. "Sec. 8. Grievances. — It shall be the duty of every member to report, without delay, all grievances to the manager, in order that prompt action may be taken to avoid a repetition of the evil, or that an accused member may be given the opportunity of vindicating himself. "Sec. 9. Violation of Rules. — All illegal or otherwise unfair practices affecting the lumber trade in this market, coming under the observation of members, shall be reported promptly to the manager. "Sec. 10. No Advance of Money, Etc. — No member of this Exchange shall advance moneys for payroll, or other purposes, to any contractor or others. Nor shall any member go on the bond of such contractor or customer. "Sec. 11. Mortgages. — Members of this Exchange shall not accept mortgages on account; provided, however, that nothing in this section shall be construed as prohibiting the acceptance of mortgage security as protection against loss on a doubtful account. *Page 483 "Sec. 12. Security. — No member of this Exchange shall surrender his lien security, nor execute satisfaction of such a claim, without payment in full of the account thereby secured, or the substitution of security equally as good; provided, however, a member may release or relinquish his lien rights in a bona-fide settlement of doubtful claims. "Sec. 13. Bad Accounts. — It shall be the duty of every member to report monthly to the manager of the Exchange any failure to secure satisfaction in full on an account. A record of all such transactions shall be kept by the Exchange for the future protection of members. "Sec. 14. Provisions for Enforcement. — Any member or employee of such member, who shall make any false or misleading report or answer to this Exchange, or who shall have recourse in any manner whatsoever to methods, directly or indirectly, in violation of, or contrary in purpose or effect to, the spirit of the foregoing rules, at the discretion of the board of arbitration, may be fined, publicly reprimanded or suspended. Any one or all of the foregoing penalties may be imposed at the discretion of the said board of arbitration." Article XV is as follows: "Sec. 1. Contracts. — No contracts shall be recognized as such by this Exchange, unless they are in writing and signed by the parties thereto. "Sec. 2. Copies Filed. — In every case where member firms enter into contracts, per thousand feet, for future delivery, copy of such contracts properly executed in writing, showing schedule of prices agreed upon and accepted, must be filed with the manager on the date the engagement is entered into, and subsequent deliveries thereon must be reported on sale cards showing items and amounts and giving definite reference to the contract in question." Article XVI on "estimating" is deemed of sufficient importance to be set out in full: *Page 484 "Sec. 1. Intelligent and Legitimate Competition. — The vital force of economic development is intelligent competition. To promote fair, open, constructive competition among the factors engaged in the St. Louis lumber trade is a chief purpose of this Exchange. And, in order that higher and more efficient standards of competition may prevail in this market, the following rules governing the submission of estimates, are hereby adopted: "Sec. 2. Estimates. — The word `estimates' shall be considered to mean a quotation on one or more items of lumber, millwork or allied products. "Sec. 3. Estimates on Forms Preserved. — A carbon copy free from alterations on all estimates amounting to fifty dollars or over, shall be mailed to the manager within twenty-four hours after receipt of inquiry, together with a white filing card used for this purpose. "Figuring Estimates. — When it is impracticable to forward copy of estimate within the time specified, a white filing card shall be properly filled out and mailed at once to the manager, accompanied by a satisfactory explanation of the delay in submitting copy of estimate. "Sec. 4. Duration of Estimates. — As a protection to the prospective purchaser all estimates shall continue open for acceptance for a period of ten days. Should application be made by a customer for an extension of time for his acceptance, it may be granted for a further period of ten days, provided the manager is notified at once in writing of such time extension. "Sec. 5. Millwork. — Where an estimate includes one or more items of millwork or merchandise, other than lumber, such items shall be quoted on separately, and if the estimate is required to be submitted in the form of a lump bid the total of all items, other than lumber, shall be given at the bottom of estimate separate from the lumber bill. Exception, however, may be made in the case of stock items of millwork or other merchandise regularly carried by retail yards, in which instance such items may be figured in the body of the bid. *Page 485 "Sec. 6. Specifications. — Estimates shall clearly show attached to each item a standard grade designation, recognized by this Exchange. (See Article XVII, Section 2). "Sec. 7. Alternates. — The value of lumber for building purposes has been greatly minimized in the minds of consumers through the practice of inducing uninformed buyers to accept alternate quotations on grades and species inferior to those originally specified. This practice tends to keep down the standards of quality below the margin of efficient utility, and is in direct conflict with the purposes of the Exchange. Therefore, that the interests of the consumer, as well as of the trade, may be effectively safe-guarded in this respect, the following rules are hereby adopted: "(a) To Estimate What Buyer Calls For. — All items in estimates must be figured according to the buyer's specification. "(b) Quotations on Options. — Suggestion as to changes in specifications must be in the form of alternates, plainly written on both the original estimate and on the copy sent to the Exchange. (See Article XVII, Section 2). "Sec. 8. Reporting Sales. — All sales based on estimates or quotations including direct sales of fifty dollars or over, must be reported to the manager within twenty-four hours after sale has been made, on standard red sales card, and all spaces must be filled in. "Sec. 9. Changes in Items. — All changes made in estimates whether authorized by customer or through error or omission, must be reported on the same date such changes are made, using standard yellow card provided for that purpose, and all spaces must be filled in and sufficient data given to clearly explain the said changes." Article XVII deals with "grades and symbols." It is an important article, but we think it does not shed any particular light on the issues here involved. *Page 486 Article XVIII, covering "inspection," is as follows: "In order that the Exchange may insure strict adherence on the part of its members, to the standard of grades, hereinbefore designated, and in order that consumers of lumber in this market may be afforded means of securing equitable settlement of any claims against members arising through questions of grade or dimension standards, this Exchange through its manager will, upon receipt of a request in writing setting forth the circumstances of such claim, provide an official inspection of the material in question. In all such cases the inspector's report shall be considered final. If five per cent or more of the material inspected is found to be off grade, the total cost of the inspection shall be borne by the member concerned, otherwise the cost of inspection will be assumed by the Exchange." Article XIX is entitled "service" and reads: "It is essential, in order intelligently and fairly to comprehend the basic principles underlying production and distribution of a commodity, that a study of actual conditions relating thereto be instituted; such a study of facts from scientific and impartial attitude will, of a certainty, reveal the weaknesses as well as the strength of any system of distribution, thus affording protection to the public, the investor, producer, distributor and consumer. The perpetuation of legitimate competition in trade requires the setting forth of all moral as well as all immoral situations as they may appear in order that evil may be eradicated and the good conserved. "Fundamentally, a correct knowledge of service cost is most necessary; therefore this Exchange, through its board of directors, shall from time to time institute comprehensive, economic surveys to be conducted by competent experts. Thesesurveys shall form the basis of service charges representing thecost of efficient distribution of lumber and other buildingmaterial handled by member firms in this market, which servicecharge shall prevail within the jurisdiction of this Exchange. *Page 487 "The detail of figures covering the service charge is not here set forth, and this because of the necessity of changes up or down, as the case may be, occasioned by the increased or lowered cost of handling lumber products in this market. We have above stated, however, the broad principles as to the service charge under which this Exchange operates." (Italics ours.) Article XX deals with "credits" and is set out in full: "Whereas, It is deemed advisable to improve credit conditions in this market, especially in the interest of the members of this Exchange, "Be it Resolved, That the following terms of sale shall prevail in this Exchange: "Section 1. Terms of Sale. — Terms of sale shall be thirty days net. After sixty days unpaid accounts become delinquent, and subject to a five per cent interest charged, to be computed monthly. "Sec. 2. Notice of Terms. — Every member of the Exchange shall cause these terms to be clearly shown on all estimates, invoices and statements covering transactions coming under the rules of this Exchange. "Sec. 3. Cash Discounts. — On all sales made by the members of the Exchange, a two per cent discount may be allowed for payment on or before the 10th of the month following delivery. This discount is also to apply on deliveries on contracts, such deliveries to be charged as they are made. "Sec. 4. Estimates to Show Gross Price Only. — It shall be the duty of every member to report promptly to the manager's office any failure to secure satisfaction in full of an account. A record of all such transactions will be kept by the manager for the future protection of members." Article XXI provides for a corporate seal. Article XXII is as follows: "BY-LAWS AND RULES; PROMULGATION. "Promulgation of By-Laws and Rules. — The manager of the Exchange shall provide every member with *Page 488 one or more copies of the articles of incorporation and by-laws and a copy of subsequent rules and rulings, and no member shallbe allowed to plead ignorance of the same in mitigation of anoffense." (Italics ours.) APPLICABLE STATUTES. The information is based on Chapter 88, Article I, Revised Statutes 1919. Section 9655 is as follows: "Any person who shall create, enter into, become a member of or participate in any pool, trust, agreement, combination, confederation or understanding with any person or persons in restraint of trade or competition in the importation, transportation, manufacture, purchase or sale of any product or commodity in this State, or any article or thing bought or sold whatsoever, shall be deemed and adjudged guilty of a conspiracy in restraint of trade, and shall be punished as provided in this article." Section 9656 is as follows: "Any person who shall create, enter into, become a member of or participate in any pool, trust, agreement, combination, confederation, or understanding with any other person or persons to regulate, control or fix the price of any article of manufacture, mechanism, merchandise, commodity, convenience or repair, or any product of mining, or any article or thing whatsoever, of any class or kind bought and sold, or the price or premium to be paid for insuring property against loss or damage by fire, lightning or storm, or to maintain said price when so regulated or fixed, or shall enter into, become a member of or participate in any pool, trust, agreement, contract, combination, confederation or understanding, to fix or limit the amount or quantity of any article of manufacture, mechanism, merchandise, commodity, convenience, repair, any product of mining, or any article or thing whatsoever of any class or kind bought and sold, or the price or premium to be paid for insuring property against loss or damage by fire, lightning or storm, shall be deemed and adjudged guilty of a conspiracy in restraint of trade, and be punished as provided for in this article." *Page 489 Section 9658 is as follows: "All arrangements, contracts, agreements, combinations or understandings made or entered into between any two or more persons, designed or made with a view to lessen, or which tend to lessen, lawful trade, or full and free competition in the importation, transportation, manufacture or sale in this State of any product, commodity or article, or thing bought and sold, of any class or kind whatsoever, including the price or premium to be paid for insuring property against loss or damage by fire, lightning or storm, and all arrangements, contracts, agreements, combinations or understandings made or entered into between any two or more persons which are designed or made with a view to increase, or which tend to increase, the market price of any product, commodity or article or thing, of any class or kind whatsoever bought and sold, including the price or premium to be paid for insuring property against loss or damage by fire, lightning, or storm, are hereby declared to be against public policy, unlawful and void; and any person or persons creating, entering into, becoming a member of or participating in such arrangements, contracts, agreements, combinations or understandings shall be deemed and adjudged guilty of a conspiracy in restraint of trade, and punished as provided for in this article." Section 9666 is as follows: "The words person or persons, used in this article, shall be deemed to include natural persons, partnerships, associations of persons and corporations created or organized by or under the laws of this State, or under the laws of any other state or country." NATURE OF THE ISSUES INVOLVED. The issue tendered by the information and the joint and several answer and return is one of fact and whether such facts bring the activities of the Exchange within the inhibition of the foregoing sections of the statute. The sufficiency of the information to charge a violation of our anti-trust statutes wasInformation. *Page 490 challenged, but we do not think it is seriously challenged, in view of our previous decisions on the point. Respondents do not press such challenge in their brief. An information in practically the same form was held good in the absence of timely motion to make more definite and certain in State ex inf. v. Arkansas Lumber Co., 260 Mo. 212. Such motion was filed and overruled before return in this case and the information thereby held to be sufficient. Respondents now meet the issue of fact squarely and have not sought to parry such issue by pleas of unconstitutionality, misjoinder of parties, statutes of limitations, claims of right to jury trial, etc., which are found in so many of the so-called trust cases previously before this court. GENERAL DISCUSSION OF THE PLAN OF THE EXCHANGE. It is readily seen from the scheme provided for in the articles of association, preamble to the by-laws and supplement thereto, and especially from the by-laws themselves, that the Exchange is at least admirably designed to be employed for the purpose of fixing retail prices of lumber sold by the members of the Exchange, who are respondents herein, and of greatly lessening competition therein. The object and purpose of the Exchange are squarely set forth in article II of the articles of association, which we have above quoted. Nothing objectionable is therein set forth, although the words "to protect and promote generally the interests of the lumber trade and individuals engaged therein" are certainly broad enough to include among the stated charter powers of the Exchange the making and entering into such agreements and understandings as are alleged in the information to have been made and entered into by the members of the Exchange. Article IX empowers the Exchange to punish members guilty of violations of the rules and regulations or by-laws by a fine of not more than five hundred dollars or by suspension or expulsion. *Page 491 The ruinous handicap of competitive warfare is deplored in the preamble; we agree that "rebates; short measures; off grades; substitutes as to species; cut-throat prices; bitter and hurtful suspicion; lack of knowledge of trade conditions; waste and inefficiency" are undesirable and that public interest and trade welfare require their elimination. But surely a commendable movement for the lessening and elimination of such conditions does not require a solemn declaration that "it is the earnest and honest purpose of those who unite in this co-operative work to do nothing that will in the least impinge upon the prohibitions of the law, but in all things keep themselves within its limitations." Rather does not such declaration indicate a fear that the very articles and by-laws themselves may leave quite the contrary impression in the public mind? The by-laws fix the membership fee at one thousand dollars, a sum large enough in itself to give pause to a member when contemplating withdrawal. We have found no provision for the withdrawal of the membership fee. In case of withdrawal or expulsion of the member, the membership fee could doubtless be forfeited. The record leaves it uncertain whether this fee was in fact forfeited upon completed withdrawal from the Exchange. In the case of the Fred Heim Lumber Company the unpaid notes covering three-fourths of the membership fee seem to have been returned after some controversy. Apparently an expelled member must pay the membership fee again if he is reinstated, for article I, section 5, of the by-laws provides that upon readmission he must comply again with the requirements of section 1 of such article, among which requirements is the payment of the membership fee of one thousand dollars. To create a fund to carry on the activities of the Exchange monthly dues in the sum of one dollar, and later seventy-five cents, on each one thousand feet of lumber, or its equivalent in other merchandise, are required in the by-laws. It is readily apparent that even the seventy-five-cent rate would naturally produce a *Page 492 large sum for that purpose. Adolphus Boeckeler, Vicepresident of respondent Boeckeler Lumber Company, and president of the Exchange when the hearings were held, testified that the total annual income of the Exchange was approximately $75,000. This was at the time testimony was being taken and under the dues collected at seventy-five cents per thousand feet. There appears to be no question concerning the substantial correctness of Mr. Boeckeler's estimate. A fund of such dimensions is a very large one for the activities required in the commendable business of education of the members of the Exchange and inducing them by moral suasion to desist from dishonest and unethical practices. Article XI, sections 12 and 13, of the by-laws, prescribe the functions of the standing committees on cost accounting and standardization of methods and on credits. The former is charged with the duty of studying and analyzing "scientific cost data." The stated purpose is that the members of the Exchange may adopt at the earliest possible moment a standard method of accounting, not only for the education of the members in the results of their own operations, but to facilitate the important functions of co-operative trade research. Not a hint of anything improper in all this. It is only when the functions of this committee, taken in connection with the survey of competent experts and the provision for compulsory application by a member of the Exchange of a service charge (provided for in Article XIX), are taken into consideration, does the possibility, yes, probability, of impropriety appear. The same may be said of the functions of the committee on credits. That committee is not only charged with the duty of studying credit conditions as applicable to the St. Louis lumber trade, but it was required to "undertake such important functions in the matter of credit control as the board of directors may from time to time provide." The study of credit conditions is innocent enough but when the Exchange undertakes to controlcredits among its members, the understanding *Page 493 invades at once a very important field of full and free competition. Article XIV is devoted to the subject of "trade ethics." Many of the practices denounced in this article are thoroughly reprehensible. Some of them, if practiced by a dealer, might well be redressed by legal action, and doubtless by criminal prosecutions, independent of their inhibition by the Exchange. But by what right or reasoning, except the compelling one of an illegal understanding, can the Exchange govern the activities of salesmen and solicitors working in the employ of members, as prescribed by section four? How can the Exchange render illegal the effort of competitors to secure business apparently belonging to another dealer, prior to the closing of a binding contract, as such right is apparently asserted in section six? By what authority, except the restraining influence of an air-tight combination with anticipated penalties of fine, suspension or expulsion, can the Exchange deny to the dealer the right of a free competitor to advance money to a contractor for any legitimate purpose, to take a mortgage on account or to forego his lien if he wishes? Yet, for such conduct the member is subject to fine, public reprimand or suspension in the discretion of the board of directors. Respondents contend that such penalties were never imposed, but the power is lodged in the Exchange to impose them. Article XV covers the subject of "contracts" — contracts between a member of the Exchange and his customer. Contracts for future delivery must be in writing and signed by the parties. Copies thereof must be immediately filed with the manager of the Exchange and delivery thereunder must be reported to him specifically. Is this provision harmless and solely for the enlightenment and education of the members as to prevailing prices or of protecting the members and customers against mistakes? Is it not of vastly greater value in checking up the business of the members competing for the particular business to see that they do not cut prices? *Page 494 It must at least be admitted that the requirement is entirely serviceable for the latter purpose. Article XVI deals with the subject of estimates on lumber and lumber products which have not ripened into contracts. Here also the inquisitorial eye of the Exchange is all-seeing. It is asserted that knowledge of estimates and actual sales made by the dealer member must be afforded the Exchange in order to guaranteeintelligent competition. No intimation is made in words in the by-laws that such knowledge will be used to penalize the member making the estimate or consummating the sale if he dares to quote or sell at too low a figure. But is not the certainty of the imposition of the penalty spoken clearly in the by-laws? Article XIX makes provision for the service charge. It first recites the necessity for the study of the basic principles underlying production and distribution of the commodity. What retail dealers have to do with, or how they can reduce the cost of, production of lumber, that is, the cost of felling the trees and manufacturing them into lumber, is not suggested. If lumber is produced under free, competitive conditions, retail dealers are only interested in knowing where and how to buy the required product for the least money. How to reduce the cost of distribution, that is getting the product into the hands of the consumer thereof, is, of course, a most valuable study for any dealer. The knowledge of such means is beneficial to a dealer and its benefit presumably will be shared with the consumer. But when the Exchange undertakes to fix and to force upon the dealer an arbitrary service charge or cost of doing business from the producer to the consumer, even though such service charge be the average cost incurred by efficient dealers, the suspicion of an intent to fix prices is a natural one, to say the least. Article XIX also provides that "these surveys shall form the basis of service charges representing the cost of efficient distribution of lumber and other building material *Page 495 handled by member firms in this market, which service chargeshall prevail within the jurisdiction of this Exchange." In other words, it is just as much obligatory upon a member of the Exchange to include in the cost of lumber products to the consumer the service charge, when fixed by the appropriate authority of the Exchange, as it is to conform to any other rule set forth in the by-laws. Penalties for non-conformity or disobedience may be imposed in like manner as for violation of any other rule. What are the elements which go to make up the selling price to the consumer? First, original cost to the dealer; second, cost of handling by the dealer; third, profit to the dealer. It is apparent that the dealer cannot continue in business unless the selling price at least equals the first two elements, and it is equally apparent that he cannot prosper in business unless such selling price includes all three elements. The dealer is entitled to charge the consumer a price sufficient to cover the original cost to him and expenses necessarily incurred by him in getting the commodity into the hands of the consumer, plus a reasonable profit sufficient to induce such dealer to remain in business. When the price to the consumer is determined by free and open competition, no just complaint can be lodged against the dealer, no matter to what heights prices soar. Such is trade honestly and fairly conducted. We have somewhat at length set out parts of the articles of association, preamble and supplement thereto and the by-laws and the meaning thereof as it appears to us. Taken altogether they constitute a scheme of government which is complete in itself within the field in which it operates. The scheme comprises a constitution and laws, a trial court and court of appeals, fines and penalties. It is in harmony with the State and Federal governmental schemes in providing that ignorance of the law is no excuse. But unlike those admirable schemes, it provides for trials in the absence of the accused and authorizes convictions upon hearsay evidence, *Page 496 save only when such hearsay evidence is not deemed reliable. The scheme authorizes the Exchange to impose fines, public reprimands, suspensions and expulsions. We have thus elaborated upon the scheme for the purpose of showing that the instrument — the Exchange — used by respondents is admirably adapted to serve the very purpose which relator charges it was used for, to-wit, to fix and maintain the price of retail lumber in St. Louis and vicinity and to limit competition. The scheme as thus outlined afforded an excellent opportunity to respondents to accomplish the doing of the things charged against them. It is the contention of relator that the Exchange fixed the selling price by use of the device of disseminating among its members information of an assumed and not always actual original cost and an ascertained service cost and that the sum of these two constituted the selling price and that a profit was included in one or the other, or both; that all members were required to sell for not less than the sum of these two elements and by such means respondents fixed prices for their commodity; that in fact the selling price was uniformly the wholesale price, either as fixed by the committee or as ascertained from the trade publication "Lumber," plus the service charge as fixed by the Exchange; that such conduct constitutes a violation of our statutes, forbidding and penalizing agreements in restraint of trade. THE REAL PURPOSE OF THE EXCHANGE. As we have already seen the Exchange furnished respondents the opportunity to fix the price of lumber. We might, perhaps, be justified in stopping here and concluding that respondents are shown by their own written agreements to be guilty of the charge of creating, entering into and becoming members of and participating in a pool, trust, agreement, combination, confederation and understanding among themselves which tends to result in the restraint of lawful trade and full and free competition in the sale of lumber in this State, *Page 497 as charged in the information; that the showing made by these instruments alone is sufficient to constitute the quantum of proof required of relator. But there is abundant proof of actual restraint of trade. Section 9658, Revised Statutes 1919, declares that persons who enter into agreements, combinations, understandings, etc., "designed or made with a view to lessen,or which tend to lessen, lawful trade, or full and free competition" in the sale of any product, commodity or article "shall be deemed and adjudged guilty of a conspiracy in restraint of trade." The articles of association, preambles and by-laws of the Exchange clearly are designed to accomplish restraint of trade and if enforced clearly tend to that end. There are strong circumstances outside of the articles of association and the by-laws which convince us that the Exchange was formed "with a view" to lessen lawful trade and full and free competition. As heretofore seen, an association of lumber dealers, known as the Retail Lumber Dealers' Association, which we refer to as the old association, had been formed a number of years prior to the formation of the new association. It functioned more or less unsatisfactorily for a number of years. It is admitted by respondents that "for a period of four months during 1912 the members of it agreed on uniform sale prices and, becoming alarmed about the legality of that practice, destroyed the records of it." John B. Kessler, a former secretary of the old association, testifying in relation to the four months of price fixing by the old association, and the burning of the records thereafter, said: "Q. How did you come to take them out to his place to burn them? A. They were so ordered. "Q. By whom? A. By the Association. "Q. For what reason? A. On motion of some one — I don't know who. "Q. And how much was destroyed at that time? Just what did that motion include of the subjects to be *Page 498 burned? A. Well, the records that pertained to a certain little four months' combination they had on. "Q. What do you mean by `four months' combination?' A. Well, it lasted four months. It was a `gentlemen's agreement' to raise the prices. They made a new list. "Q. What four months were those? A. Oh I don't remember; they were — "Q. Do you remember what year? A. 1912, I believe. "Q. Up to the time of that four months' agreement was it compulsory for the various members to follow the printed price list which they were using? A. No, sir. "Q. Was there any change in 1912 as to making this compulsory? A. Well, they all claimed they were getting too little money for their lumber and competition was fierce and they were all cutting prices so much that they needed something of the kind, and they agreed to raise the list, which they did, and that started in on a `gentlemen's agreement,' and we kept a record of all the bids that were submitted. "Q. Now, what happened during that four months with regard to raising prices? A. In what way do you mean what happened? "Q. Were prices raised during the four months? A. Yes, sir; they were raised three different times; once when we started and twice after that." Mr. Kessler's testimony tended to show that the old association at all times promulgated lists of retail prices for the use of its members. We quote from his testimony: "GENERAL BARRETT: They had a list of prices then? A. Always had a list. "Q. And that list was prepared, you say, by a committee? A. Always by a committee. "Q. Of the Association? A. Of the Association. "Q. In what manner did the committee prepare that list? How did they obtain the data? A. They would meet there and compare the wholesale price; that *Page 499 is to say, they ought to get above the wholesale price about so much. Now, about what that is, of course, that varied. "Q. They would discuss wholesale prices; is that right? A. Yes, sir. "Q. And then what would they do? A. Well, they would probably appoint a committee to revise the list. "Q. Revise the wholesale prices? A. No, the retail prices. It was a retail list. "Q. They made up then the retail price, did they? A. Yes, sir. "Q. What did they do with that list when it was made up? A. Well, they had several thousand of them printed. One yard would take as many as they thought they had places for, or customers; might be a hundred; some would take more; some would take up into a thousand, or two thousand. I have had two thousand printed for some of them. "Q. Were those lists which they took identical for different yards? A. Possibly one or two exceptions. Where one probably might object, he would say, to the low price of a single item on the list, they gave him permission to raise that if he chose to, but not lower. "Q. Would he use one of those lists with the corrections noted? A. Yes, sir. "Q. Or would he have an entirely different list? A. No. His list would be the same as the others, but he might have an item of flooring that he felt they were not asking enough for, and he would probably add a dollar or fifty cents. "Q. And he might complain, on the other hand, because some of the prices were too high and he wanted to sell for less? A. Well, I didn't notice that. "Q. Did you notice any instance of that? A. No. "Q. Would those price lists have marks upon them identifying them as the list of any particular concern? A. The first page usually had their ad. *Page 500 "Q. The inside pages were identical? A. The second, third and fourth pages were always the same. "Q. Were those prices listed differently for different companies, or was it just one standard price for all companies? A. One standard price; one standard list, with these exceptions I spoke of, which weren't many. "Q. When did that uniform price list first go into operation? A. Oh, they had one when I went there first. "Q. How long did that continue? A. Well, they would get those out at intervals, depending wholly on the wholesale market prices of course. Sometimes they would run sixty days, sometimes ninety days; sometimes they wouldn't get them out for six months." These lists would stand for different periods. Some for sixty days, some for ninety days and others for six months. The practice continued all the time Mr. Kessler was secretary of the old association, which covered a period from its organization until 1913, when he retired from his position as secretary. All the members put out similar price lists, with possibly slight variations, always above the list. The old association was unable to hold its members to the price lists and therein the organization failed. As Mr. Kessler said, it was not compulsory to sell at the prices stated in the lists. "There was no fine for cutting." It also appears from the testimony of Mr. Kessler that bids of the members of the old association were reported to the association and for a time complete sales also. The old association failed to accomplish the ends desired by the members and gradually lost its influence. It died of "dry rot." The conditions leading up to the organization of the Exchange are frankly testified to by John J. Moran of the unincorporated company of Reis-Moran Lumber Company. That company was a member of the Exchange at the time the information was filed, but not made a party respondent. He said: "Q. Are you familiar with the conditions that existed in the retail lumber market in St. Louis prior to March, 1917? A. Yes, sir; thoroughly familiar. *Page 501 "Q. Thoroughly familiar? What are those conditions? A. Well, they were a condition of dissatisfaction to those that had their money invested in the lumber business as a rule, especially in the retail business having departments that boasted — or of having a business that boasted of a retail department. "Q. Now, in what way were they unsatisfactory? A. I presume the part that reached a man's heart was the part that reached his pocketbook. The competition, probably due to the number of yards, or otherwise, was very severe, and it resulted in a great deal of dissatisfaction. The tone of the business was degraded. Hardly a man in it that was proud of it. There was a condition of fellowship that was underlined with a mistrust. "Q. Was, in your opinion, that competition honest or dishonest? A. Well, it might be classed as dishonest, but it was a condition that was forced upon the men. "Q. By whom? A. Well, it was a condition that was probably created by — I might cite back a little — following the World's Fair there was a profitable period in the lumber business; during that time and previous to that time there was an inflow of new yards. After the Fair there was a period of depression and so on, and the number of yards probably wasn't commensurate with the demand in town; probably — I might say probably — may have had more yards than were necessary; anyway, there was a great effort to take business one firm from another, and the matter of prices always being at the head of the game, price was used to get business, to take business one yard from another, two or more men claiming the customer, and such methods as that, such features as that, bringing eventually the results that caused the prices to be continually cut, and cut, and cut — slashed — until the ultimate margin was not what it should be, making of course, or causing of course, an effort to cut out something for the money that was being paid, or that was paid, for the stuff, which was so small that compared with the cost of the stuff there was very little left to the yard." *Page 502 In discussing the abuses leading up to the organization of the Exchange and the reasons for abandoning the old association, President Boeckeler said: "Q. You say the primary purpose of the formation of this Exchange was to try to get rid of those evils? A. Yes, sir. "Q. Had you been trying before by this other organization? A. We had. "Q. By a previous organization? A. Yes, sir. "Q. Had they worked out successfully? A. No, sir; it never worked at all. "Q. Why not — in your judgment? A. We had no control of the members. We had no way to — we had no organization such as this, whereby we could educate them in the proper manner." Doubtless the real reason for the failure of the old association was that it had no machinery to control the members or to penalize them for violation of rules. Mr. Boeckeler did not give the want of power to penalize as a reason, but it is clearly apparent that such was the real reason he had in mind. His statement that the want of an organization to educate the members was the cause of the disintegration of the old organization seems utterly lame, inadequate and an afterthought. We think the learned Attorney-General not unfairly sums up the situation when he says in his brief: "While these witnesses and these exhibits, with considerable circumlocution, clearly show that the `evil' which the Exchange was formed to eradicate was competition, called, it is true, by various damning names, as `unfair' competition, `cut-throat' competition, `dishonest' competition, the respondents generally succeeded in omitting the word competition from their testimony. The constant burden of their song was that the Exchange for whose maintenance since its institution they have expended to exceed $350,000, was established for the purpose of improving the ethics of the trade and especially for the purpose of protecting the unfortunate public from their own criminal tendencies, when unrestrained. The *Page 503 evils, they said, were short measurements, substitution of grades and species, not low prices resulting from competition. To give color to this explanation the respondents thought it necessary to blacken their own business reputations and to confess (each for his associates) that they were little better before they organized in 1917 than a gang of pillaging highwaymen. It is almost inconceivable, but it is true, that these men, who no doubt would be greatly shocked if any one should suggest that this admission of former depravity affects their credibility as witnesses, were willing to and did admit, in order to provide a motive for what they are doing and have done, that they were utterly unscrupulous until March 22, 1917, when their sins were organized away." President Boeckeler testified that respondents Boeckeler Lumber Company, Ganahl Lumber Company, Philip Gruner Brothers Lumber Company, Holekamp Lumber Company, Mound City Lumber Company, Prendergast Lumber Company, H.E. Rapp Lumber Company, Julius Seidel Lumber Company, St. Louis Lumber Company and Vandeventer Lumber Company had been members of the old association. These companies afterwards became members of the Exchange. Their combined capital stock was about double the combined capital stock of those corporate members of the Exchange who had not been members of the old association. Thus it is apparent that the Exchange was largely comprised of former members of the old association. The old association admittedly tried to, and for a time did, fix the retail price of lumber. While not nominally taking over the old association, the Exchange largely inherited its membership, and surely its passion for fixing prices. What the old association failed to do by reason of inherent weakness in the organization itself, the Exchange could and apparently did accomplish through a superior plan and with power to control its members and penalize infractions of rules by them. The stated corporate powers of the Exchange include all the activities of the old association and many additional activities with the *Page 504 powers to make such activities effective and of value to its members. PRICE FIXING AND LESSENING OF COMPETITION. We think it reasonably apparent that the Exchange inherited the inclination of the old association to fix prices and eliminate competition or, at least, greatly curtail it, and we have heretofore shown from the terms of its charter and by-laws that it had the opportunity, and we think the purpose, to do this. Did the Exchange actually fix prices and eliminate competition? With the inclination and opportunity to do so fairly deducible from the evidence, it does not require a great volume of evidence to satisfy the court that this was in fact done by respondent retail lumber dealers through the Exchange. Disclaimers of such intentions and accomplishment of the desired result, by interested witnesses, even though such witnesses outnumber those testifying to the contrary, should be weighed in the light of such interest. In fact, it seems to be practically admitted by respondents that their organization did have a tendency to fix prices and to curtail competition and did so to a certain extent, but not unreasonably so. Of this later on. Relator contends that the retail lumber trade of respondent dealers constituted ninety per cent to ninety-five per cent of the total retail lumber business within the field covered by the Exchange. Adolph W. Ganahl, president of the Fred Heim Lumber Company and former member of the Exchange, testified that the members of the Exchange did ninety per cent of such retail business. E.R. Darlington, former president of E.R. Darlington Lumber Company, put it at ninety-five per cent. Respondents say, however, that these witnesses are prejudiced and unfair. R.S. Hoxie, manager of the Exchange at the time the testimony was taken, estimated the business of respondent dealers at fifty per cent of the total, but admitted having testified before the special commissioner, Judge SHACKLEFORD, at the preliminary investigation, that such percentage was from fifty per cent to seventy-five *Page 505 per cent. Mr. Hoxie testified that there were twenty-three members of the Exchange, and seventeen lumber dealers who were not members. The testimony of other witnesses indicates, without being definite, that the number of non-member dealers was much greater than that, and Mr. Hoxie himself afterward fixed the number of non-members at thirty. John A. Reheis, president of the St. Louis Lumber Company, with a capital stock of a million dollars, which company was a member of the Exchange from its organization, fixed the proportion of the retail lumber business done by members of the Exchange at "at least sixty per cent," but said it was not possible it was ninety per cent. President Boeckeler said the Exchange did "far less than fifty per cent." In this connection it may be noted that he testified that his company did approximately one-tenth of the retail lumber business of St. Louis. For the year ending June 30, 1921, as shown by relator's Exhibit 27, the Boeckeler Lumber Company sold at retail 11,102,390 feet of lumber. The names of the members are not stated on this exhibit. Some sort of "key" was apparently necessary to understand the exhibit; but it otherwise appears that the Boeckeler Lumber Company made the largest retail sales, and we thus arrive at the sales of Mr. Boeckeler's company. On the basis stated by Mr. Boeckeler, the total St. Louis sales at retail for that period would have amounted to ten times that amount, or 111,023,900 feet. Mr. Gruner's figures were much greater than this. Reported sales made by members of the Exchange, with some two or three members omitted, for the years 1917 to 1921, inclusive, averaged over eighty million feet annually. This would be over seventy-two per cent of 111,000,000 feet. The relator contends the total average annual sales of all the members amounted to at least ninety million feet. If so, the members of the Exchange controlled over eighty-five per cent of the retail lumber business of St. Louis and vicinity. The various estimates ran from fifty per cent to ninety-five per cent. *Page 506 We will not undertake to find as a fact just what proportion of the retail lumber business was actually controlled by respondents. Their influence on the business was doubtless greater than the proportion of their business to that of the total number of retail lumber dealers in St. Louis, both those who did and who did not belong to the Exchange. The Exchange members were organized. Their influence was thus combined and more powerful. The non-members worked alone. They had no organization to further their interests. The full extent of the trade strength of respondents is further apparent when it appears that their retail business was approximately one-third of their total business. The conclusion necessarily follows that the Exchange, through its members, exercised a dominating influence upon and control over the St. Louis retail lumber market, whether they did fifty per cent or seventy-five per cent of the St. Louis retail lumber business. Did the organization of the Exchange and adherence to its rules, either voluntarily or under compulsion, by reason of penalties, eliminate, or tend to eliminate, competition and did such organization fix prices or tend to fix prices? Prior to the time the Exchange came into existence, the individual dealers, who afterwards became its members, were at liberty to make such terms of sale as they pleased. The Exchange required them to make terms of sale at thirty days net, with two per cent discount for cash upon payment on or before the tenth day of the month following delivery. For a breach of this rule a member might be punished. President Boeckeler testified that prior to the organization of the Exchange the dealer could make any discount or give any credit he wished. The Exchange forbade such complete liberty of action. Credits and discounts are clearly important elements in competition. By its rules and strict enforcement thereof, the Exchange largely destroyed this element of free competition. The rules forbade advancement of money to contractors. It is quite likely competent contractors, naturally *Page 507 customers of a given dealer or attached to such dealer by his ability to render financial assistance, would be unable to bid upon certain contracts and the business would be lost to such dealer. The dealer was not allowed, except under specified circumstances, to take mortgages on account or surrender material men's liens upon structures. The manner of deliveries was also regulated and made uniform. These restrictions undoubtedly greatly lessened competition. The elimination of such means of getting business, not in themselves reprehensible in any way, but strong points in attracting a certain class of customers, clearly eliminated a portion of the competition. The rules against such practices not only had a tendency to curtail competition, but actually did it. But the strongest feature of the organization was the price-fixing feature. The service charge and the replacement cost were the means used. Under the advice of L.C. Boyle, a former Attorney-General of the State of Kansas, a plan was devised which was thought not to violate the statutes of this State against agreements, combinations and understandings in restraint of trade. General Boyle advised the dealers that the plan was safe, although he admitted it had never passed muster in the courts. The plan ostensibly was to have a scientific study made of the cost to the retail dealer of handling lumber from the manufacturer to the consumer and make it obligatory upon members of the Exchange to add such cost of doing business or service charge, when thus ascertained, to replacement cost, leaving it to the dealer to secure a profit out of the selling cost over and above the sum of the service charge and replacement cost. The replacement cost was ostensibly the wholesale price of lumber to replace stock, before the dealer had been put to any expense in handling, storing, insuring, selling, delivering, billing, collecting for same, etc. The standing committee on market conditions was entrusted with the duty of studying and analyzing market conditions and keeping the members informed concerning *Page 508 wholesale prices. At first the committee compiled and furnished to the members from time to time lists of such wholesale prices. President Boeckeler testified: "A. Oh no, I see what this is: This is a list that was compiled by a committee on the market conditions. "Q. A committee of the Exchange? A. Yes, sir. "Q. Compiled for the Exchange? A. Yes, sir. "Q. For the use of the members? A. Yes, sir, as a guide and as to the market of the possible purchase price of certain commodities. "Q. How often was a list of that kind prepared by the Exchange? A. That varied. "Q. Periodically, lists of this kind were sent out? A. Yes, sir; if there was any great change in the market, the market committee got together and brought their various quotations from the wholesalers, and finally determined, as to their best ability, how to arrive at a fair and equitable market. "Q. And that practice still continues? A. No, sir. "Q. When was it discontinued? A. Two years ago or more. "Q. Why was it discontinued? A. Because we found, in following the quotations as published in the publication of `Lumber,' that they accurately reflected the market, and as a good many of our yards have kept a very intelligent record on the subject it was concluded to adopt `Lumber' as a basis, and since that time the Exchange, as well as other members, have kept in touch with the publication of `Lumber' and the market conditions and find that the publication of `Lumber' does reflect the true market. By JUDGE GOODE: The true wholesale market? A. Yes, sir; and it was far simpler and easier than this form of sending out information to its members. "GENERAL OTIS: You began then to use `Lumber' as the source of information of the Exchange and its members, about two years ago? A. I think it was two years ago. "Q. Do you remember the exact date? A. No, sir. *Page 509 "Q. Could you approximate the exact date? A. I couldn't do that, it is in the records. "Q. In what records would that be? A. The secretary can give you the date. "Q. Prior to the time when you began using `Lumber' as the source of information of the Exchange of wholesale prices, the Lumber Exchange Committee arrived at that same information, or tried to, and incorporated it in bulletins of which Relator's Exhibit No. 2 is an example? A. Yes, sir. "Q. Of course, the questions I have just asked you, that I have referred to `Lumber,' I have been referring to the publication called `Lumber' and I infer you have been? A. Yes, sir. "Q. This sheet, as I understand you now, was what was used until two years ago as the basing price by the members of the Exchange; that is correct, isn't it? A. Yes, sir. "Q. How did the committee of the Exchange arrive at these figures — these wholesale prices? A. The committee was composed of five members, I believe, and they were all experienced and well-informed lumbermen, who got their data from the manufacturers and wholesalers throughout the South — brought them together, met at this meeting, and all produced their quotations, and in that way did the best they could to arrive at an equitable and fair basis as a wholesale market of lumber." It appears that the wholesale prices determined by the market conditions committee ran along so closely with those quoted in the trade publication called "Lumber," a publication not controlled by the Exchange, that it was found the quotations of "Lumber" could safely be accepted, and the market conditions committee practically ceased to function so far as furnishing the members with the results of their independent investigations was concerned. All that committee did thereafter was to advise the members of fluctuations in the wholesale market as shown by "Lumber." *Page 510 That the wholesale prices fixed by the market conditions committee at first and later by "Lumber" were used as a basis by the dealer members and required so to be used by them is shown also by President Boeckeler's testimony: "Q. When a member of the Exchange makes a price or submits a bid to a customer, there are three elements taken into consideration. First, the wholesale market price; second, what is called the service charge, and, third, his profit — is that correct? A. Yes, sir. "Q. Two of those elements, namely, the wholesale market price and the service charge, are determined for the members by the Exchange, is that correct? A. No, sir. "Q. The service charge is determined for the member, by the Exchange? A. Yes, sir. "Q. You mean then, that the wholesale market price is not determined for the members, by the Exchange? A. No, sir. "Q. However, the wholesale market price is supplied to the member by the Exchange? A. Simply as a matter of information, which is public knowledge. "Q. It is supplied, whether as a matter of information or not, it is supplied to the members? A. Yes, sir. "Q. That is done weekly, is it not? A. Whenever the market changes, which is about weekly. "Q. As I understand it, if I am mistaken you will correct me. Of course, those wholesale market prices that are supplied by the Exchange to the members are obtained by the Exchange from the publication called `Lumber?' A. It is also obtained by each and every member from the same publication. "Q. I understand, but the Exchange obtains its information from that publication? A. Yes, sir. "Q. And it sends that information out to the members in printed or typewritten forms, mimeographed forms? A. It simply notes the changes; in other words, the Exchange in one operation will do what every one of *Page 511 the members would have to do individually, and as a labor-saving device they notify the members of any change in the market, as shown by the publication of `Lumber'. "Q. In what form are they notified, by printed sheet, typewritten or mimeographed? A. That is mailed to the members. "Q. That is one of the functions of the Exchange to furnish the information to the members? A. Yes, sir. "Q. And the member of the Exchange is required to use that as a basis in fixing his selling price, is that correct? "BY JUDGE GOODE: We object to the form in which he tells him it is used. "BY THE COMMISSIONER: Ordinarily that would not be permissible, but this is a witness on one side who is interested. "BY GENERAL OTIS: I will be very glad to change the form of the question. "BY THE COMMISSIONER: It might be well to do that hereafter. "BY GENERAL OTIS: Although I think the rule is unquestionable that we have a right to cross-examine this witness, he is an interested party. "BY THE COMMISSIONER: All right. "GENERAL OTIS: I will ask you whether or not members of the Exchange are not required by the Exchange to observe, in fixing their retail price, the wholesale market price furnished them by the Exchange as the basis on which that retail price is built up? A. That is — there is no requisition set forth in the by-laws of the Exchange, and this is simply as information to the members as to what the market is. "Q. Are the members not required to take that as the basic price, and do they not take it as that? A. Yes, sir. "Q. They are expected to take that? A. Yes, sir." Thus it appears that the Exchange definitely fixed two elements of the selling price. It did not announce a *Page 512 definite figure for the wholesale price, but the committee on market conditions, and later "Lumber," announced proper wholesale prices, and the members were expected to and in fact were required to observe the same and to add to that the service charge. These elements were fixed and certain because they could be and were thus made fixed and certain. In this connection the testimony of Adolph W. Ganahl was as follows: "Q. Do I understand you to say that, when you have added a service charge to the cost prices furnished you by the Exchange, the result was your selling price? A. Yes, sir. "Q. That is your retail selling price to your customers? A. Yes, sir. "JUDGE GOODE: You must have added a profit. "GENERAL OTIS: As a matter of fact, did you add any profit, or was that your retail selling price? A. This was our retail selling price, only in several instances I did add a profit. "Q. But in the general run of instances was that table that you prepared, which is Relator's Exhibit 8, was that your retail selling prices? A. That was the retail selling price; yes, sir. "Q. Where did you get your profit — out of the service charge? A. I didn't state there was any profit on that. That was supposed to be a handling charge. "Q. I say in those cases where did you get any profit, if you got any profit, when you used those prices as the retail selling prices? I mean when I say `those prices' the prices contained in the table of prices appearing on Relator's Exhibit 8? A. Well, the Exchange explained it — "Q. I am not asking you what the Exchange explained. I am asking you where you got your profit, if you got any, when you sold at the prices contained on that sheet? A. Supposed to have been included then in the service charge. *Page 513 "Q. Yes, sir. What did you find resultant, if anything, when you added any profit to the prices that are contained on the sheet of paper marked Relator's Exhibit 8? When you bid in competition with other members of the Exchange what was the result with the comparison of your prices and theirs? A. We were generally slightly higher. "Q. In those cases when you did add a profit and thereupon found you were higher than the members of the Exchange who bid in competition with you, what amount of profit did you add, if you remember? A. From twenty-five cents to a dollar a thousand. "Q. And when you added that you found you were higher than the other members of the Exchange? A. Yes, sir. "Q. And, of course, in that event you lost the job; is that right? A. Yes, sir." Respondents assert that competition was left free and open by reason of the fact that prices were fixed only as to replacement and handling costs, and because the dealer was free to fix his selling price at such additional sum as he could secure in competition with other Exchange members and non-members, under the other protective regulations of the Exchange, and thus take a profit in addition to replacement and handling costs. But in practice this result was not attained. The fact appears that the wholesale prices announced by the market conditions committee and later by "Lumber" were not necessarily the actual wholesale prices. Again we quote from President Boeckeler: "Q. My question is this: You have stated that the members of the Exchange were expected to follow the wholesale market price and take that as the basic price. Now, my question is — the members of the Exchange, for example, your company, the Boeckeler Lumber Company, is expected to take the wholesale price as furnished by the Exchange, even though in a particular instance the Boeckeler Company had purchased lumber which it was about to sell, below the wholesale market price furnished *Page 514 you? A. The Boeckeler Lumber Company, as I may speak in that regard, considers the quotations as set forth in the publication of `Lumber' as reflecting the market; any purchases we might make under that quotation would be nothing more than an advantageous purchase and would be considered under the market and we would ordinarily simply consider that part of our profit and would accept the publication of `Lumber' as a fair reflection of the market and use that as a market in the basis of our quotations. "Q. That is what I understood and wanted you to make clear — the market price furnished by the Exchange is taken as basing point irrespective of what they actually paid to the wholesaler? A. It is my experience you are not buying it for much less than is published; if you do, it is nothing more than taking it advantageously. "Q. As I say, the member of the Exchange is supposed to and does take the market price furnished by the `Exchange' as the basic price, even though the member may have purchased lumber at a less than wholesale price? A. Yes, on that basis. "Q. That has been the practice of the Exchange since its formation, has it not? A. Yes, sir." On rapidly advancing wholesale prices a large profit could be taken, but, on the other hand, rapidly falling wholesale prices would entail large losses on stock on hand. However, there was nothing in the rules and by-laws preventing the member from selling above the wholesale price, if he could get that price. The forbidden thing was to sell below the current wholesale price, plus the service charge. W.W. Bradley, president of the National Lumber Company, an independent dealer, testified: "Q. Have you compared the invoice prices which you have paid at any time with the prices quoted in the publication called `Lumber?' A. No, sir. "Q. Have you, or have you not, a general impression as to the comparison between those prices? A. I have a general knowledge of the prices. *Page 515 "Q. What is your answer? A. General knowledge of the prices of the wholesale. "Q. What is that general knowledge? A. We get lists from the large mills quoting prices — selling us. "Q. How do those lists from the large mills compare with the prices in `Lumber?' A. Well, they are generally a little higher than what we can buy it for from the smaller mills. "Q. But the prices in this publication called `Lumber,' how do they compare with the prices from those large mills that you speak of? A. Well, I think they are generally higher — the publication is I mean. "Q. They are higher? A. The published list. "Q. You think the published list is even higher than the lists that come ordinarily from the large mills? A. Yes, sir. "Q. And you are certain at least that in a great number of instances you can buy at a lower figure than the figures from the larger mills, which are often even lower than the figures published in `Lumber;' is that right? A. Yes, sir; at times." Testifying in relation to the subject of how prices were fixed before the Exchange was organized, Leo Ganahl, former general manager of Fred Heim Lumber Company, for a month or more a member of the Exchange, said: "Q. What was your gross profit, Mr. Ganahl, on jobs of that character, per thousand? A. We always figure jobs at the price we had the lumber in the yard, or at the price we could buy it at. If we had the lumber in the yard at a lower price than we could buy, we used that figure. It was always best to base our estimate upon the cost of material and then add what we thought we would be able to get the job at, and it was sometimes as low as a dollar and a half. "Q. Per thousand feet? A. It was the price we could buy it at, or the price we had the stuff in the yard. "GENERAL BARRETT: Are you talking of past conditions? A. The conditions during the time that I was in the lumber business." *Page 516 Thus it is shown by substantial and convincing testimony that the wholesale prices, furnished first by the Exchange and later by "Lumber," were frequently, indeed usually, higher than actual wholesale prices and, by using them and adding the service charge, a profit could be secured. The service charge or cost of doing business is not claimed to have been the actual cost incurred by any particular dealer. It was an artificial cost, an average (so it is claimed) of the cost incurred by efficient dealers doing seventy-five per cent of the business done by members of the Exchange. In his reply brief relator shows from nine exhibits wide variations in the expenses of doing business per thousand feet, as between the least and the most efficient companies, follows: Relator's Exhibit 11, .....................$ 6.60 to $18.43 Relator's Exhibit 20, ..................... 6.49 to 19.41 Relator's Exhibit 21, ............. $7.00 ($7.11) to $14.53 Relator's Exhibit 22, ..................... 8.93 to 15.36 Relator's Exhibit 23, ..................... 9.53 to 15.38 Relator's Exhibit 24, ..................... 10.52 to 16.36 Relator's Exhibit 25, ..................... 10.01 to 19.97 Relator's Exhibit 26, ..................... 12.00 to 25.47 Relator's Exhibit 27, ..................... 12.37 to 23.27 The expenses of the most efficient companies, of course, show smaller variations between the high and the low expenses used in making up the average constituting the service charge. It is claimed that the service charge did not include any allowance for profit, bad debts, depreciation of stock, interest on investment in plant or Federal income taxes. Just why unpreventable losses through bad debts, deterioration of stock, and interest on investment tied up in the plant of the member were not regarded as legitimate expenses is not made clear, and the reason for their exclusion is not apparent to us. But so runs the testimony. Where the dealer paid rent, that item was considered. Federal and State income taxes are presumably *Page 517 calculated on and are deductions from net income, and, of course, do not constitute operating expenses. The service charge did, however, include dues to the Exchange. There can be no serious contention about the fact that the retail price of lumber in St. Louis during the activities of the Exchange was such wholesale price, plus such service charge. Not only did Adolph Ganahl and E.R. Darlington, formerly members of the Exchange, and said by respondents to be prejudiced witnesses and possessors of grievances against the Exchange, so testify, but R.S. Hoxie, manager of the Exchange and presumably authorized to speak for it, admitted as much. On this point and when explaining an advertisement appearing in the St. Louis newspapers on September 16, 1921, Mr. Hoxie testified as follows: "Q. Is it true or not true that that broken line, which you have here, saying `St. Louis Retail Prices' correctly informs the public as to what the retail prices were?" (Referring to relator's Exhibit 16). "A. I consider it does. "Q. That is on the theory and only on the theory that the retail prices are the service charge, plus the wholesale, and upon no other possible theory? A. No, sir. "Q. How do you reconcile those two statements? A. There are sales made on that basis. "Q. Did you intend to inform the people of St. Louis in this, the retail price that might occasionally be made or the general retail price? A. General. "Q. You didn't intend to represent to them an occasional retail price, as a general retail price? A. No, sir. "Q. You intended that this line on this chart, marked Exhibit 16, to be a truthful statement of the St. Louis retail prices from July, 1917, until the present time? A. Yes, sir. "Q. And is it a truthful statement? A. Yes, sir. *Page 518 "Q. However, this line — the broken line on this chart which you have labeled here as `St. Louis Retail Price' — is nothing more than the wholesale price, plus the service charge? A. Yes, sir. "Q. So you now say that the retail price in St. Louis since the organization of this Exchange, as shown by your records and as shown by this chart, is the wholesale market price, plus the service charge? A. Yes, sir. "Q. The Exhibit 16, which you have just identified, being the advertisement that appeared in the St. Louis papers, is a copy only of Respondents' Exhibit A which was identified by you at Jefferson City on the 9th of September, is it not? A. Yes, sir. "Q. Respondent's Exhibit A, however, contains one additional graphic line to that which appears on the exhibit that has been marked as Relator's Exhibit 16, and that additional line is the line which indicates the rise and fall of the service charge? A. Yes, sir. "Q. On Respondents' Exhibit A that additional line that I have just spoken of is called the `Wavy line, cost of service,' isn't it? A. Yes, sir. "Q. That wavy line appearing on Respondents' Exhibit A is an exact statement of the service charge as taken from your records? A. Yes, sir. "Q. And that service charge, added to the wholesale price, gives the third line, namely, what you now say is the retail price? A. Yes, sir. "Q. That is right, is it not? A. Yes, sir." The explanation attempted in respondents' brief that Mr. Hoxie referred only to occasional sales and not to retail prices in general is not convincing. It is a strain upon credulity to accept the contention that neither the replacement cost nor service charge includes dealer's profit when for years the retail prices were exactly equal to the sum of such replacement cost and service charge. We can hardly be expected to believe respondents were in business for their health or as public benefactors. *Page 519 On the point of uniformity of prices we quote from the testimony of R.L. Rinehart, officer of a large contracting company operating in St. Louis, and a heavy purchaser of lumber. This is shown by the fact that his company constructed the Jefferson Hotel, the Statler Hotel, the Railway Exchange Building, the Grand Leader building and other large buildings. He said: "Q. Mr. Rinehart, I want you to state whether or not you have noticed any difference as to the uniformity of prices charged for lumber sold in St. Louis since the spring of 1917 as compared with the condition before that time? A. Yes, I have. "Q. Will you state what you have noticed in that regard as a contractor? A. Well, during the years of 1918 and 1920 there was, on retail prices, a uniformity of price on all quotations we received. "Q. Do you purchase lumber from certain lumber companies or from all the lumber companies in St. Louis? A. Well, we purchase from those we are acquainted with. "Q. What are the principal companies with which you have been doing business in the last three or four years? A. Well, the Ganahl Lumber Company; the Gruner Lumber Company; Shellabarger Lumber Company; Hill-Behan. "Q. To what extent has that uniformity of prices that you speak of existed? I mean about what degree of variation, if any, has there been in the prices that have been made by these companies? A. There isn't any at all. "Q. Was there a considerable variation, or any variation, in prices prior to 1917? A. Some, yes." Respondents deny uniformity of prices under the Exchange and cite the facts that there was considerable variation, sometimes as much as twenty-five per cent, between the various bids made on business offered by the city of St. Louis. The testimony of the deputy in the Supply Commissioner's office tends to support this contention. Just why such variation in bids was shown only as to purchases by the city does not appear. *Page 520 That the bids for city business did not always vary to any material extent is shown by certain bids shown to one of respondents' witnesses. On September 14, 1917, on streets and sewers, Requisition 61, on lumber to be delivered Quincy Street, the following bids were made: Boeckeler Lumber Company ............. $661.00 St. Louis Lumber Company ............. 661.19 Prendergast Lumber Company ........... 661.20 Ganahl Lumber Company ................ 661.29 Julius Seidel Lumber Company ......... 661.29 Darlington Lumber Company ............ 661.30 Gruner Brothers Lumber Company ..... 661.30 Again on June 27, 1919, on streets and sewers, Requisition 169, various prices of No. 1 yellow pine lumber, the bids were as follows: Boeckeler Lumber Company ............. $695.22 Wiles-Chipman Lumber Company ......... 695.22 Gruner Brothers Lumber Company ..... 695.22 Julius Seidel Lumber Company ......... 695.22 The uniformity of prices fixed by the respondents submitting bids, as shown above, is remarkable, unless it can be explained by the fact that the selling price was fixed by agreement in those instances. It is only just to say that we have not found where the foregoing bids on city business were directly offered in evidence. It is admitted that up to January 1, 1920, penalties were imposed upon members for cutting prices below the sum of such wholesale prices and the service charge as thus fixed. It is contended that after that date no penalties were imposed for such offenses. Testifying to this point, President Boeckeler said: "Q. Now, upon this wholesale basing price furnished by the Exchange, I mean the information furnished by the Exchange to the members, the members of the Exchange are required — to that they are required to add the service charge. That is true, isn't it? A. The members are simply told that the service charge shall prevail. *Page 521 "Q. That is the rule of the Exchange, that the service charge shall prevail? A. Yes, sir. "Q. That means that a member who doesn't add that fixed service charge to his selling price violates the rules of the Exchange, doesn't it? A. Yes, sir. "Q. And that he is subject to being penalized and fined for violating that? A. No, sir; not since 1920. "Q. You discontinued that? A. Yes, sir; in January, 1920. "Q. Upon the advice of counsel? A. Yes, sir. "Q. That it was a violation of the anti-trust laws? A. I don't know that it was definitely stated what views our counsel took in the matter. "Q. You know that, Mr. Boeckeler, don't you? A. I would say so, yes, sir. "Q. Do you know what the exact date was when you discontinued penalizing members for not conforming to the service charge rule? A. My best recollection is January 1, 1920. "Q. Nevertheless, while you no longer impose a fine for a violation of that rule, nevertheless, the rule still exists that the members shall charge the same service charges? A. Oh, yes. "Q. Prior to the first of January, 1920, or prior to the date, on advice of counsel, you discontinued fining members for violation of the service charge rules — that was one of the chief activities of the Exchange? A. It was one of the activities. "Q. It was the chief activity, at least of the board of arbitration? A. It was one of their activities, whether it was the chief one, possibly so. "Q. There was scarcely a meeting of the board of directors when there was not one or more complaints, when some member or more than one member had violated the rules. Isn't that correct? A. Yes, sir. "Q. And the board of directors referred it to the board of arbitration? A. Yes, sir. "Q. Your company was frequently fined for violation of the service charge rules? A. Yes, sir. *Page 522 "Q. And frequently fined for violations? A. Yes, sir; we have been. "Q. And what was true of your company was also true of each of the respondent companies? A. Yes, sir." That the imposition of penalties for cutting prices was a stern realty is shown by the minutes of the board of arbitration of the Exchange. The entire record is set out in the transcript and required 184 pages of printed matter to reproduce it. It set forth the records of 679 cases. The learned Attorney-General at page 84 of his brief makes a summary of these complaints, which is unchallenged by respondents, except to intimate that some of the cases called price-cutting complaints may have really been complaints for the violation of other rules. We set out the summary: "Total number of cases ............................. 679 "Charges of cutting Exchange prices ................ 649 "Fines remitted on account of outside competition ................................................. 355." The Attorney-General makes the further analysis of the minute book, as follows: "Study of the minute book of the board of arbitration in connection with other evidence reveals the illuminating fact that while the Exchange prohibited price-cutting as between the members, it licensed and approved price-cutting as against all companies which were not members. In hundreds of instances in that record it will be observed that members were fined for price-cutting and the fine remitted on the ground that there had been `unfair competition.'" To support his analysis he quotes from the testimony of G.L. Walters, secretary of the board of arbitration, and we reproduce such testimony directly from the transcript: "Q. Certainly, but I want to get clear just what — whenever the term `unfair competition' is used in this book it refers to competition by an outside company, doesn't it? A. Yes, usually by outside competition. *Page 523 "MR. CARTER: I submit, Your Honor, he is misleading the witness. He has repeated twice it was the competition of an outside member that was unfair and below cost, and not merely an outside member. "THE COMMISSIONER: You seem to be leading him back. Go ahead. "GENERAL OTIS: Now, I want to ask you again, and I am not misleading you; you listen to what I say and you won't be misled; where the word `unfair' is used in this book — I am now referring to the minute book of the board of arbitration, Relator's Exhibit 32 — when it appears that by reason of `unfair competition,' as it says, the fine is remitted, that refers to a case in which there has been competition by an outside company, doesn't it? A. Yes. "Q. Yes, sir. Now, you understood that question all right, didn't you? A. Yes. "Q. When did you discontinue assessing fines for violation of the service charge rule, if you ever did discontinue that practice? A. Well, I don't believe we fined any this year for violation of the service charge. "Q. You mean 1921? A. Yes." Thus it appears that over ninety-five per cent of the cases before the board of arbitration were at least nominally for price-cutting and less than five per cent for substitution of grades, short measurements, etc. The minutes of the board of arbitration speak louder than disclaimers to the contrary that price control was the principal object of the Exchange. INJURY TO THE PUBLIC. Relator contends that the effect of the activities of the Exchange has been to increase greatly the cost of lumber and to mulct consumers of millions of dollars. We are satisfied prices were increased directly to a certain extent thereby, with resulting injury to the public, but it does not appear that the Exchange was responsible for anything like the full extent of the increased prices which prevailed almost immediately after it was organized and began to function. The great mass of the *Page 524 testimony so shows. Large increases did come, but it does not appear that the Exchange was responsible for the greater part of such increase. However, we are com-compelled to disagree with respondents' contention that the public was not injured. Increased prices were evident, not only in lumber, but in all other commodities. This was clearly shown by the testimony of Paul W. Brown and others. The entire existence of the Exchange has been within the period covered, first, by our entrance into and participation in the great World War, which utterly upset prevailing prices and repeatedly sent them up by unprecedented advances, and, second, by abnormal conditions since the war. A new and tremendous demand for lumber for ships, cantonments and buildings to house war industries was coincident with a great labor shortage, due to withdrawal from ordinary industry of millions of men for military training and overseas duty and increased demand for labor in new industries serving preparation for war. It would manifestly be unfair to attribute the rise in prices immediately following the incorporation of the Exchange entirely to or even largely to its activities. Some of the increase, however, may thus be accounted for. The increased costs of labor, supplies, etc., naturally were reflected in the cost to the dealer of doing business and largely accounted for the increased amount determined as the service charge. The same considerations, together with increased freight rates, said to be seventy-one per cent, were also reflected in the wholesale prices with which respondents were confronted. The evidence does not show that consumers of lumber have lost millions of dollars because of the activities of the Exchange, as claimed by relator. They, no doubt, have been compelled to pay higher prices on that account. Such is the tendency to be expected from the scheme comprised in the Exchange and there is substantial testimony to that effect. Even though no showing of actual injury to the public has been made, "the obvious and *Page 525 necessary effect of the agreement is to restrain trade" and that is a sufficient showing. [State ex inf. v. Arkansas Lumber Co.,260 Mo. 212, l.c. 314.] On the other hand, the evidence shows that respondents' contention that many of the abuses of the retail lumber business prevalent before the organization, if they then existed to the extent claimed by respondents, have been largely eliminated. True, many practices, inherent in unrestricted competition and not reprehensible in themselves, have gone with the bad practices. Respondents contend that the main purpose of the formation of the Exchange and of its rules was to eliminate dishonest practices from the retail lumber business in St. Louis and to inculcate more economical methods of business and that whatever restraint upon trade has resulted is only incidental and is not unreasonable restraint. A great many pages of the transcript are filled with testimony concerning dishonest and intolerable practices which had grown up among the retail lumber dealers. Few specific instances were cited. Some of these were repudiated afterwards. The eradication of such dishonest practices and trade abuses was worthy of the combined efforts of the lumber dealers. However, one cannot read this record without arriving at an abiding conviction that price raising and fixing and restriction of competition — not only dishonest, cut-throat, ruinous competition, but just plain, old-fashioned competition — were the main purpose and object of calling the Exchange into being and that the elimination of dishonest practices was the incidental part of the scheme. Such alleged worthy purpose was merely the cloak in which the real purpose was dressed to make it look respectable. Such view of the facts makes it unnecessary to consider cases relied on by respondents as holding agreements, pools, etc., to be legal where the main purpose is lawful and restraint of trade is only incidental. The case of State ex inf. v. Standard Oil Co., 218 Mo. 1, cited and relied upon by respondents, announced no rule of law which can avail respondents under the *Page 526 facts in this case. In speaking of the same statutes we are here considering, WOODSON, J., said at page 379: "They prohibit the making of all contracts and combinations which have for their object and purpose the restraint of trade or the fixing and maintaining of prices; but those sections in no manner denounce as illegal any contract regarding trade which has for its object a legitimate purpose and which only incidentally stifles trade." OPEN COMPETITION PLAN. The plan of the Exchange on paper was not exactly the "Open-Price Plan" or the "Open-Competition Plan." Bids and sales were required to be reported to the Exchange, but the evidence shows that only competitors and the proper officials had access to such bids and sales ordinarily. Respondents cite the case of United States v. American Linseed Co., 275 F. 939, as supporting the legality of the "Open-Price Plan." We quote from the opinion of CARPENTER, District Judge, as follows: "The purpose of the council and bureau was to collect and furnish to the various members current quotations on linseed oil, the record of sales of oil, including prices, statistics as to stocks on hand, crop conditions at home and abroad, and other information of interest or value to the manufacturers of linseed oil. The Armstrong Bureau entered into contracts with certain of the defendants and agreed to furnish them the foregoing information for a consideration. "Pursuant to these contracts, the various subscribers daily reported their price lists to the bureau, and promptly sent word of any change. Other information was also furnished from time to time. The statements received and collected by the bureau were immediately sent out to all the members of the association. "The record discloses that the information collected and distributed by the bureau to its several members was of the kind which a sagacious business man secures, or endeavors to secure, in the operation of his enterprise. The information was true. The price lists furnished *Page 527 were made in the regular course of business, and offered in good faith to customers or prospective customers. There was no proofthat the members of the association ever, at the bureau meetingsor at any other place, discussed prices or made agreements withrespect to prices, and there was no evidence that the prices asked by any of the subscribers were not in accordance with the market price of flax seed, upon which the price of linseed oil was based. "Production was not limited during the period the bureau was in operation. There was no proof of division of territory. There was no proof that the prices asked by the individual defendants were not fixed by them upon their own judgment, considering all factors affecting supply and demand. There was no proof showingthat any member was under the slightest obligation or constraintto ask higher prices or maintain prices." (Italics ours). It may be seen at a glance that the plan of the Armstrong Bureau, of which the American Linseed Oil Company was a member, was not in the same class with the Exchange we are considering. As Judge CARPENTER there said: "The only restraint which the rules of the bureau on their face impose is that the members agree not to deviate from their price lists without informing the other members at once by telegraph. At the close of each business day every member knew until the next day what the market was." That scheme was very different from this one which bound the members of the Exchange to charge not less than certain prices and provided for penalties for violation of the rules. The facts in the American Linseed Oil Company Case did not go far enough and the opinion of Judge CARPENTER based thereon affords no support for respondents in contending for the legality of the agreements they made through the Exchange, where there ispresent the very thing the absence of which in the American Linseed Oil Case is so much stressed by Judge CARPENTER, to-wit, control over prices. Nor did the plan of the Armstrong Bureau onpaper contemplate an agreement on prices, not even minimum prices. *Page 528 The very late case of American Column Lumber Co. v. United States, 42 Sup. Ct. Rep. 114, written by Mr. Justice CLARKE and concurred in by Chief Justice TAFT and four other justices, six in all, dealt with the so-called "Open-Competition Plan" among the hardwood lumber dealers. The district court of the Western District of Tennessee had granted a permanent injunction against plaintiffs in error as members of the American Hardwood Manufacturers' Association, and the Supreme Court affirmed the judgment. The plan of that association on paper contemplated daily and other reports covering sales actually made with full details and shipments thereunder, monthly reports on production during the preceding month and stock on hand; monthly reports showing price lists and immediate reports on new prices. The plan also contemplated inspection by the association. It was provided: "All of these reports by members are subject to complete audit by representatives of the association. Any member who fails to report shall not receive the reports of the secretary, and failure to report for twelve days in six months shall cause the member failing to be dropped from membership." Mr. Justice CLARKE said: "Plainly it would be very difficult to devise a more minute disclosure of everything connected with one's business than is here provided for by this Plan, and very certainly only the most attractive prospect could induce any man to make it to his rivals and competitors." The scheme contemplated the reciprocal arrangement of full reports of the secretary of the association to all members. The opinion then proceeded: "This extensive interchange of reports, supplemented as it was by monthly meetings at which an opportunity was afforded for discussion `of all subjects of interest to the members,' very certainly constituted an organization through which agreements, actual or implied, could readily be arrived at and maintained, if the members desired to make them. . . . *Page 529 "This elaborate plan for the interchange of reports does not simply supply to each member the amount of stock held, the sales made and the prices received, by every other member of the group, thereby furnishing the data for judging the market, on the basis of supply and demand and current prices. It goes much further. It not only furnishes such information, with respect to stock, sales and prices, but also reports, giving the views of each member as to `market conditions for the next few months'; what the production of each will be for the next `two months'; frequent analyses of the reports by an expert, with, we shall see, significant suggestions as to both future prices and production; and opportunities for future meetings for the interchange of views, which the record shows were very important. It is plain that the only element lacking in this scheme to make it a familiar type of the competition-suppressing organization is a definite agreement as to production and prices. But this is supplied: By the disposition of men `to follow their most intelligent competitors,' especially when powerful; by the inherent disposition to make all the money possible, joined with the steady cultivation of the value of `harmony' of action; and by the system of reports, which makes the discovery of price reductions inevitable and immediate. The sanctions of the plan obviously are financial interest, intimate personal contact, and business honor, all operating under the restraint of exposure of what would be deemed bad faith and of trade punishment by powerful rivals." The way in which the Hardwood Manufacturers' Association offended was in urging increases of prices and in curtailing production. No compulsion was employed other than discontinuance of reports and fear of displeasure of the association. There was no agreement to raise or maintain or fix prices or to curtail production and, of course, no fines or forfeitures were imposed. In this respect the case before us is different. The facts here make a much stronger case against respondents. *Page 530 The words of Mr. Justice CLARKE apply very appropriately to the Exchange: "Such close co-operation, between many persons, firms, and corporations controlling a large volume of interstate commerce, as is provided for in this Plan, is plainly in theory, as it proved to be in fact, inconsistent with that free and unrestricted trade which the statute contemplates shall be maintained, and that the persons conducting the association fully realized this is apparent from their protesting so often as they did, in many of their confidential communications appearing in this reccord, that their purposes were not unlawful, that they sought only to supplant cut-throat competition with what in their own judgment would be `fair and reasonable competition,' and to obtain, not make, fair prices, and by their repeated insistence that the Sherman Law, `designed to prevent the restraint of trade, is itself one of the greatest restrainers of trade, and should be repealed.' "To call the activities of the defendants, as they are proved in this record, an `Open-Competition Plan' of actoin is plainly a misleading misnomer. "Genuine competitors do not make daily, weekly, and monthly reports of the minutest details of their business to their rivals, as the defendants did; they do not contract, as was done here, to submit their books to the discretionary audit, and their stocks to the discretionary inspection, of their rivals, for the purpose of successfully competing with them; and they do not submit the details of their business to the analysis of an expert, jointly employed, and obtain from him a `harmonized' estimate of the market as it is, and as, in his specially and confidentially informed judgment, it promises to be. This is not the conduct of competitors, but is so clearly that of men united in an agreement, express or implied, to act together and pursue a common purpose under a common guide that, if it did not stand confessed a combination to restrict production and increase prices in interstate commerce, and as, therefore, a direct restraint *Page 531 upon that commerce, as we have seen that it is, that conconclusion must inevitably have been inferred from the facts which were proved. To pronounce such abnormal conduct on the part of 365 natural competitors, controlling one-third of the trade of the country in an article of prime necessity, a `new form of competition,' and not an old form of combination in restraint of trade, as it so plainly is, would be for this court to confess itself blinded by words and forms to realities which men in general very plainly see, and understand and condemn, as an old evil in a new dress and with a new name." REASONABLE RESTRAINT OF TRADE. Respondents apparently confess that the activities of the Exchange did restrain trade and curtail competition to a certain extent, but not unreasonably so, and that our statute should be construed to permit combinations and agreements whose main purposes are lawful and which do not unreasonably restrain trade; that prices have not been raised to the injury of the public; that the activities of the Exchange on the whole have been of great benefit to the public; that for such reasons — and the record contains quite substantial testimony to support such contentions — this court should not condemn the activities of the Exchange or visit punishment upon respondents for their participation in the plan. The conclusion is irresistible that respondents have not only become members of a pool, agreement, combination, confederation and understanding for the purpose of regulating, controlling and fixing the price of lumber at retail and limiting and restricting competition, and that such was the chief purpose of such organization, but that they have actually accomplished such purpose. Are such acts unlawful because such restraint of trade is reasonable, as respondents contend it has been? Division One of this court has given its answer to this question in State ex rel. v. Peoples' Ice Co., 246 Mo. 168, wherein Judge JAMES T. BLAIR, then commissioner, said: *Page 532 "The statute of this State leaves scant room for construction. We are not concerned in this case with any question as to a contract, otherwise lawful, which incidentally restrains trade. The rule applicable in such a case is not applicable in this. Nor is it within our province to give the statute any other meaning than its language imports. Our duty to apply the statute as it is written is as plain as the language of that statute and in that language there is no ambiguity. The statute condemns every direct restraint of trade, great or small. It closes the only door through which doubts as to its construction could enter by positively prohibiting defined combinations without regard to what the courts may think as to the extent of their effect. The Legislature saw fit to ordain `that competition and not combination' should obtain in business in the State. As long as it moves in its constitutional orbit the judgment of the Legislature is final and the wisdom of its enactments is not open to question in the courts. "The case of Standard Oil Company v. United States, 221 U.S. 1, cannot be relied upon to elicit a different answer to the contention now being considered. In that case it was said, in effect, that the act of July 2, 1890 (the Federal Anti-Trust Act), was inapplicable to combinations and conspiracies in restraint of trade which did not have the effect of restraining trade unreasonably. A considerable portion of the opinion is devoted to the discussion of the question. The court did, however, hold that the Standard Oil Company unreasonably monopolized and restrained trade and, consequently, the reason for its discussion of the question as to what rule might apply when some defendant or combination which but reasonably restrained trade might appear at its bar is not apparent. Such discussions under ordinary circumstances are usually termedobiter dicta and not regarded as authoritative beyond their intrinsic value as arguments. We need not enter into a discussion of the decision in that case, however, since the rule *Page 533 first stated is established in this State and since our statute precludes all question on the subject." In support of their claim that reasonable restraint upon trade is permissible under our statutes, respondents cite State ex inf. v. International Harvester Co., 237 Mo. 369, and particularly local citation 391. There it was said by VALLIANT, C.J.: "In 1902, when the negotiations which led up to the organization of the International Harvester Company were begun, competition between the large harvester machine companies in the United States was such as to reduce the market to a condition that was deplorable from the standpoint of the competing companies and it is not certain that its tendency was towards the ultimate advantage of the consumer of those machines. Whilst the tendency of fair competition is to produce a wholesome condition of the market, yet competition may be of such a character and so designed as to destroy the weaker competitors, leaving only the giant in the field, who then would have a monopoly of the market. The law is not interested alone in the consumer, but it has regard also for the producer and would, if it could, protect a small manufacturer or dealer from the destruction that the avarice of a powerful rival might design. Therefore, the argument of the learned counsel for the respondent is not without force, that the competition that existed in 1902 in the harvester machine market was not the kind of competition that the lawmakers had in mind when they enacted the anti-trust statutes. Butunfortunately for that argument it is impossible for theLegislature to prescribe a general rule by which competitionconducive to a wholesome condition of the market can bedistinguished from a competition that is demoralizing anddisorganizing. In a late case (Standard Oil Co. v. United States, 221 U.S. 1), the Supreme Court of the United States held that the act of Congress which prohibits contracts in restraint of trade was to be construed in the light of reason, and when so construed it did not forbid the making of every contract that had for its purpose *Page 534 a restraint of trade, but only such as had for its purpose an unreasonable restraint of trade; and, for an example, the court referred to contracts whereby a voluntary restraint would be put by an individual on his own right to carry on his trade or calling; contracts of which character were by the common law of England at one time held to be void, but the doctine was afterwards modified so that it was only when a restraint by contract was so general as to be coterminous with the kingdom that it was treated as void. Reading the whole opinion in that case we infer that when the court says a reasonable restraint of trade is not forbidden by the statute, it refers to the restraint which is placed on the trade by the terms of the contract or by the act in question. Under that decision as we understand it, if a contract provides for a reasonable and lawful restraint of trade it is not forbidden by the statute or if the act done is potential only of such a reasonable restraint it is not condemned. Under the rule there laid down if a contract in question or an act of combination is significant or potential only of a reasonable restraint of competition it is not within the condemnation of the statute. But when a contract or act of combination is to be upheld on the theory that it is only a reasonable restriction on trade, it must appear on the face of the contract or act that the restriction which it creates is limited within reasonable bounds. It will not avail one who attempts to defend a contract unlimited in its terms or an act that is unlimited in the apparent scope of its power, to say that it will be used only in a moderate degree. The law is jealous of an unlimited power in such case in whosesoever hands it may be placed." (Italics ours.) We do not understand from the language quoted that this court was committing itself to the theory of legality of contracts in reasonable restraint of trade or curtailment of competition. Judge VALLIANT was there discussing the meaning and effect of the decision of the United States Supreme Court in the Standard Oil Case, 221 U.S. 1. The language of the Federal Anti-Trust Act *Page 535 is quite different from our own. Sections 1 and 2, which were under consideration in Standard Oil Company v. United States,221 U.S. 1, are quoted in full by Mr. Chief Justice WHITE at pages 49 and 50, as follows: "`Section 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 such contract, or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. "`Sec. 2. Every person who shall monopolize, or attempt to monopolize, or 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, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.'" No provision of such clear and unambiguous meaning as our Section 9658 is found in the Federal Act. Judge VALLIANT in the International Harvester Case then proceeded to discuss principles controlling in the case then under consideration, which we think are in point in this case: "In the case at bar we are to take the acts of the parties and judge their purposes by the consequence that would naturally result. When men deliberately and intelligently go to work and acquire power that will enable them to control the market, if they choose to exercise it, there is no use for them to say that they did not intend to control the trade or limit competition, nor when the legality of their act of acquisition is in question is it any use for them to say we have not used the power to oppress any one. Counsel for respondent argue that *Page 536 the mere possession of power incident to the possession of wealth is not unlawful if it is not unlawfully exercised and that is so. Wealth is power, and it may, without violation of law, be exercised to influence the market. The statute we are now considering is not designed to limit the amount of wealth one may lawfully acquire, therefore not designed to limit the influence that wealth may exert, but it is designed to forbid the acquisition of power for the purpose of influencing the market by combinations of interests that otherwise would compete in the market. The law regards such a power acquired by such a combination as dangerous to the rights of the people and forbids its acquisition. If immediately on the organization of the International Harvester Company and its appointing the respondent to act as its agent and before any of its products were put on the market an information in quo warranto had been presented in court against it, it would have been no answer to the complaint for the respondent to say: True it is we have this power, but we are not going to use it to the injury of the farmers or of other dealers in the same kind of implements. Neither is it any defense, after operating under the power for a time, to say we have not up to this date used the power to injure anyone." Discussing our statutes in a concurring opinion in the same case, Judge GRAVES said: "The several clauses purposely placed therein by the lawmaking power do not mean one and the same thing, but were put there purposely to be far reaching in effect. It was intended to reach all conceivable methods which might be designed by shrewd `captains of finance.' The purpose of the statute was to thwart action in the very incipiency as well as all down the line. It was designed to reach all arrangements, etc., which were designed and made with the view of lessening competition, as well as those which in fact did that thing. Either class falls equally under the ban of the statute — one no more nor less than the other." *Page 537 Respondents cite State ex inf. v. Armour Packing Co., 265 Mo. l.c. 178, as supporting the legality of agreements which only reasonably restrain trade. The language there used was not the language of the court. It appears in the dissenting opinion of Judge BOND. The other cases relied on by respondents are from other jurisdictions and not binding on us, in view of our own positive rulings on the subject and the clear language of our own statute. The practices of the Exchange are not essentially different from those of the insurance companies which were condemned by Court in Banc in State ex inf. v. Firemen's Fund Insurance Co.,152 Mo. 1. Prior to 1895 the anti-trust laws were not deemed broad enough to include combinations and agreements among insurance companies fixing rates. In that year an amendment was secured which did include them. One Fetter had previously been employed to fix rates which all the companies agreed to follow. Thereafter Fetter issued his own rate-books and sold them to the companies. In 1897 the law was further amended and strengthened. The local agents of the respondent companies formed a so-called social club of underwriters at St. Joseph. MARSHALL, J., then proceeds as follows: "After the formation of this club, the fire insurance done by the agents of the defendant companies was carried on in this way: The secretary had a list of the numbers of all policies in the agent's office, so as to enable him to keep check on every daily report that went to the company; the daily report contained the name of the company by which the policies were written, the name of the assured, the date of issuance and of expiration, the amount of insurance, premium, rate, general form of policy, the property insured, with its location. These daily reports were made out by the agents, placed in stamped but unsealed envelopes addressed to the company issuing the policy, and the envelopes were turned over to the secretary of the club for inspection and to be sealed and mailed by him. He kept no record of anything *Page 538 that was done in his office, but at first, if there was a variance between the rate specified in the policy and that fixed by the Fetter rate, the secretary would put a small slip on the report to notify the general agent of the company of the variance; afterwards it was thought `inexpedient' to have any such matters in writing, so the secretary simply notified the agents verbally of any variance and demanded to know the reason therefor. In this way every daily report from an agent to his company passed under the inspection of the secretary, and he alone mailed all reports to the companies. To prevent an agent from writing a rate in the policy in conformity to the Fetter rate and afterwards giving the insured a rebate, all the agents also submitted all their monthly statements to the secretary and he inspected them and likewise mailed them. Several times an agent was detected not living up to the Fetter rate, and then the club met and the offending agent was called on for an explanation, which was accepted as satisfactory and `everybody arose to their feet and expressed a determination to live up to the rates' (Fetter's rates). There was an unwritten by-law of the club prescribing that `where a member was caught cutting a rate there was to be a penalty of not to exceed $50, for the first two offenses, and after that loss of his agency.' Some of the general managers of the defendant companies testified that they had never heard of the club or its practices until this proceeding was begun; others testified that they had expressly refused to allow their agents these club expenses and had charged them back to the agent; while the manager of the Queen Insurance Company wrote the local agent as follows: `While we are not fully advised as to the situation in St. Joseph, yet, at the same time we understand that all agents, with the exception of your good self, are now members of the Social Club. In the interest of harmony and correct practice we trust you will find it convenient to associate with the organization referred to, as it will undoubtedly redound to our mutual welfare.'" *Page 539 The conclusion reached by Judge MARSHALL was that "the Underwriters' Social Club of St. Joseph is a plain, palpable, but bungling, pool, trust, agreement, combination, confederation and understanding organized to evade the anti-trust laws of Missouri, but wholly inefficient for such a purpose. The local agents did it and all knew it, and their knowledge is the knowledge of their companies, and their acts are the acts of their companies." It would seem that the conclusions reached by this court en banc in State ex inf. v. Arkansas Lumber Co., 260 Mo. 212, should have served as a warning to respondents. Apparently there was no compulsion exercised upon the lumber dealers in the organization considered in that case. Possibly respondents here felt that the agreement not to sell below minimum prices, fixed by so-called actual costs, differentiated the cases. In many of its essential facts the Arkansas Lumber Company Case is quite similar to the case at bar. We quote from the opinion as follows: "The association was, as we have seen, organized in 1890; it had when this suit was instituted some three hundred members, who controlled at least one-third of the output of yellow-pine lumber in the United States. When this action began and for many years before, the association was annually expending in the conduct of its affairs from $60,000 to $75,000 per year, out of which sum the secretary was paid an annual salary of $8000, and of which sum one respondent alone paid $2500 per year, although until 1906 — sixteen years after its organization — it had no word in constitution or by-law publicly setting forth and declaring the objects of its organization and maintenance, the raisonsd'etre, of its living, moving and having its being. At the meeting held in Memphis on the 27th of February, 1906, there were present some six attorneys, who, after viewing the transactions of the association, recommended that an amendment to the constitution be had, which should set forth to the public the association's excuse for existing. Accordingly *Page 540 in July, 1906, at the semi-annual meeting in Chicago, article 3 to the constitution was adopted. This article is as follows: "`The object of this association shall be to secure a full understanding of the conditions surrounding the lumber market in the territory covered by this association; the establishment of uniform grades for the inspection of lumber; to promote uniform customs and usages among manufacturers of lumber; to procure and furnish to its members such information as may tend to protect them against unbusinesslike methods of those with whom they deal, and such other information as may be for the benefit of the members of the association; and to propose and carry out such other measures as may be deemed for the welfare and in the interests of the manufacturers of lumber, who shall be members of this association.' "Unfortunately for a clear and connected showing of the dealings of the Southern Lumber Manufacturers' Association and the Yellow Pine Lumber Association, the secretary had destroyed `as junk' in 1906, all of its records, including letters in letter files, up, apparently, to the very date of destruction." Concerning the price fixing features, Judge FARIS said: "This brings us to a consideration of the proof upon the charge that respondents fixed the prices to be charged for yellow-pine lumber in this State. The learned commissioner finds that respondents are guilty also upon this charge. Practically from the organization of the association of yellow-pine-lumber manufacturers and dealers, this association issued a price list. We need not go back in the discussion here further than the year 1902, however. At each annual meeting there was appointed by the Yellow Pine Association a committee of members thereof, consisting of from ten to fifteen of the largest manufacturers and most prominent and aggressive members of the association. . .. *Page 541 "This Committee on Values was a standing committee, which made report at the annual and semi-annual meetings of the association, recommending given and stated prices for each item of the several grades and specifications of lumber manufactured and sold by the component members of the association. These reports of the Committee on Values were adopted by the association as the prices to be charged for the several items and grades of lumber. The Committee on Values also, if need arose, met in the interim between the annual and the semi-annual meetings of the association and promulgated new price lists of yellow-pine lumber, which lists the committee transmitted to the secretary and the latter sent out to the members of the association. In the year 1905 seven such price-lists were gotten out. These conditions subsisted till some time in the latter part of the year 1905 or the early part of the year 1906, when legal investigations of the methods of the association, or of certain of its component members, having been set on foot in the State of Mississippi, the Yellow Pine Association, through its board of directors, unanimously adopted a resolution on the 24th day of January, 1906, providing that the Committee on Values should no longer make any report other `than of existing conditions applicable to the trade,' and that such committee should not make`any recommendation affecting prices to be charged for lumber orthe amount of the product or output thereof.' This resolution, as well as the reasons for the adoption of the same, are set outin extenso in the statement of the case. No report of the Committee on Values was presented to the following annual meeting. But at the next meeting of the board of directors a new section was added to the by-laws of the association. This section was adopted February 27, 1906, and is as follows: "`Section 5. A committee of thirty shall be appointed by the president, to be known as the "Market Committee," whose sole duty it shall be to ascertain from time to time and in such manner as they may deem advisable, the prevailing market price of the various *Page 542 classes of yellow-pine lumber and the existing conditions as to supply and demand for the same, and to cause the facts thus ascertained to be disseminated from time to time among the members of the association; and it shall be the duty of the secretary to aid said committee in the discharge of its duty.' "The committee of thirty was appointed. The names on it are familiar names upon the record. By the advice of counsel they never acted, but later the matter of getting out a price-list of lumber, or a `Yellow Pine Price Current,' was turned over to George K. Smith, the secretary of the Yellow Pine Association, who selected a list of sixty-three correspondents, for the major part members of the association, from whom he got monthly reports of the prices which they were asking for lumber of the several kinds, grades and specifications adopted by the association. From these reports, he says, as a basis he made up a flat rate sheet of delivered prices upon a basis of a freight rate of twenty-three cents per hundred weight. We need not here go into the details of the printing, dissemination and promulgation of this list. We have set these out in the statement. Suffice it to say that the prices shown by Secretary Smith's compilation of the reports of his sixty-three correspondents, were unfair; they are styled by the learned commissioner `boosting' prices. If a great majority of the sixty-three reports showed no advance in the price of a given item, the price list would yet, almost without a single exception, show an increase in the price of this item. From time to time flat-rate lists were made up; from these as a basis booklets were prepared, showing delivered prices on the various kinds and grades of yellow-pine lumber at freight rate from ten cents to forty-five cents. These booklets were issued by the association and so stated upon their title-pages, till as late, at least, as December 27, 1905. They were called `Yellow Pine Price Currents' till, at least, as late as July 18, 1906, and were afterwards styled `Market Reports on Yellow Pine Lumber.' Till December 27, 1905, they bore a date, *Page 543 stating at what time the prices therein became effective, and this, too, whether they were gotten out, or purported to be, by the individual members of the Yellow Pine Association or by the secretary of the association. Some nine to thirteen thousand of these lists were printed for each revision of prices and sent out by the secretary. Sometimes a special cover, as for the Long-Bell Lumber Company, would be used to enclose the flat list, or the booklets with the freight rates extended, in which case the members of the association, respondents and others, would give orders to the secretary for whatever number of copies of the flat-list or the booklet were desired. These would be fitted with the individual cover of the member, addressed upon the addressograph of the secretary of the association and by him sent out to retailers and customers of the members of the association. This, in brief, is a recapitulation of the acts of the association upon the charge under discussion." Judge FARIS further said: "That these prices were reasonable, as they contend, and such as in the nature of things might have eventuated regardless of the acts of respondents, does not help them; they may not violate the law and when caught red-handed say, as a defense, that their acts perhaps hurt no one, since the chances are the prices would have risen anyway (Addyston Pipe Steel Co. v. United States, 175 U.S. l.c. 237); nor does it avail them to urge that the real object of the Yellow Pine Association was good, and that the ills which grew up in or grew with the association were unintentional. [State ex inf. v. Firemen's Fund Ins. Co., supra.] It is not necessary for an agreement which restrains trade to be entered into for the purpose of so doing; it is enough that the obvious and necessary effect of the agreement is to restrain trade. [United States v. Freight Association, 166 U.S. 290.]" The conclusion we have reached is inevitable in view of the language in Section 9658, Revised Statutes 1919. "All arrangements contracts, agreements, combinations or understandings made or entered into between *Page 544 any two or more persons, designed or made with a view to lessen,or which tend to lessen, lawful trade or full and free competition in the . . . sale in this State of any product, commodity or article . . . and all arrangements, contracts, agreements, combinations or understandings . . . which aredesigned or made with a view to increase, or which tend toincrease, the market price of any product, commodity . . . are hereby declared to be against public policy, unlawful and void; and any person or persons creating, entering into, becoming a member of or participating in such arrangements . . . shall be deemed and adjudged guilty of a conspiracy in restraint of trade." (Italics ours). It is the exclusive province of the Legislature to declare the public policy of the State and when the Legislature has outlawed all agreements, etc., "designed or made with a view to lessen, or which tend to lessen" full and free competition or which are "designed, or made with a view to increase, or which tend to increase" the price of any commodity, such declared policy is sacred ground which we may not invade. So long as the Legislature has declared such public policy within the exercise of its constitutional authority (and such constitutional authority has been repeatedly upheld by the court and is not challenged in this case), the courts may not add to or take away from the public policy thus declared. In the Standard Oil Case, 218 Mo. at foot of page 378, WOODSON, J., said: "But even if that was not the common law, yet there is nothing in either the State or Federal Constitution which prevents the enactment of a statute prohibiting the making of all contracts in restraint of trade, whether reasonable or unreasonable." Our statute is so explicit and all-inclusive in its language that there is left no room for construction by the courts. When the Legislature has denounced all agreements, understandings, etc., which tend to lessen full competition, or which tend to increase market prices, we may not construe such language to mean: All agreements *Page 545 which tend to lessen competition, except those which do not unreasonably lessen competition, and all agreements whichtend to increase prices, except those which do not unreasonably increase prices, shall be deemed against public policy and void. Other courts upon different statutes may have been justified in applying the "rule of reason." We will not undertake to distinguish such cases. Under the clear and explicit language of our statute, there is no room for such construction. THE PUNISHMENT TO BE IMPOSED. Having reached the conclusion that respondents are guilty as charged in the information, the only remaining question for consideration is the nature and extent of the punishment to be imposed upon respondents. The St. Louis Lumber Exchange is merely the instrument used by the other respondents to carry into effect their unlawful purposes. With its activities along the line of investigating costs of doing retail lumber business and ascertaining proper wholesale prices and disseminating information of such prices and general trade education and encouragement and stimulation of the public, in the use of lumber, no criticism can justly be made. Its activities in eliminating dishonest practices, such as substitution and short measurements are entirely commendable and a positive benefit to the public. These evil practices are either violations of existing laws or subjects for legislative action. But the activities of the Exchange in fixing arbitrary dealers' costs, which are in fact retail selling prices, and in dictating credits, discounts and security for indebtedness, tend to and actually do restrain trade and are clearly unlawful. In doing these things the Exchange, and through it the other respondents, have clearly abused their franchises, exceeded their legitimate corporate powers and violated our anti-trust statute. Imposition of a fine against the Exchange is simply imposing an additional fine upon the other respondents. The present scheme of the Exchange *Page 546 is so shot through with unlawful activities that the good cannot well be separated from the bad, and the bad eliminated. The only effective punishment is to take the corporate life of the Exchange; to forfeit its charter. With respect to our action in regard to franchises and rights to do business in this State of the other respondents, the only adequate punishment is unconditional ouster. In the numerous cases of this character, wherein we have adjudged corporations guilty of violating our anti-trust statute, we have fixed the punishment at fines and forfeiture of corporate rights, with conditional stays of execution as to ouster. Such judgments apparently have not served as a warning or prevented recurrence of similar acts by other business interests. Time and again this court has spoken in no uncertain terms denouncing such acts. It is time that we exercise the full force of the law, and, where we find the corporation guilty of violating our anti-trust statute, put that corporation out of business for all time. Such course is apparently necessary to instill in big business a wholesome respect for the law. The statute has teeth in it, if the courts have the courage to use them. It is, therefore, the judgment of the court that those respondents who are incorporated under the laws of this State be ousted from their corporate franchises, and that those respondents who are organized under the laws of other states and have secured licenses to do business in this State be ousted from such franchises. In addition to forfeitures of the charters of respondent members of the Exchange incorporated under the laws of this State and in addition to forfeitures of the licenses to do business in this State of respondents incorporated under the laws of other states, we deem it proper, just and necessary to impose substantial fines, payable to the State of Missouri, against respondents who are members of the Exchange. In fixing the amount of such fines we are mindful of the facts shown in the record that the exchange has undoubtedly been an instrument operating for the good *Page 547 of the public in many of its activities. The Exchange has not been in any large degree the cause of the tremendous increase in the price of lumber during its existence up to the date the testimony was taken in this case. We are satisfied, however, that the price fixing plan of the Exchange and features herein condemned, together with the cost of maintaining the Exchange (a very large sum in itself), have added materially to the already heavy burdens of the lumber consuming public. The financial strength and amount of business done by the members should also be considered in fixing the amount of the fines to be imposed, as well as consideration being given to the extent of the activity of the particular member in the work of the Exchange, as we have gathered such facts from the record. The good faith of respondents in joining the Exchange, remaining members thereof and participating in its activities, is also a matter for consideration. It is evident that respondents endeavored to go as far as possible in the direction of restraining trade and controlling the retail lumber business in St. Louis and immediate vicinity, without subjecting themselves to prosecution under our anti-trust statute. In furtherance of this purpose they took legal advice from competent and highly respected counsel. That they did this to avoid violating the letter of the law, while undertaking to violate its spirit, seems clear. They had apprehensions and misgivings which impelled them to seek re-assurance from time to time by consulting other lawyers, both as an organization and as individuals. It may be that respondents did not intend to violate the letter of the law, but whatever their intentions we find they violated not only the spirit of the law, but its letter as well. It is our conclusion, therefore, that punishment be imposed against respondents as follows: Boeckeler Lumber Company, ouster and fine of ....................................... $10,000 Clayton Lumber Company, ouster and fine of ....................................... $ 2,500 *Page 548 Cherokee Lumber Company, ouster and fine of ....................................... $ 2,500 Louis Essig Lumber Company, ouster and fine of ....................................... 2,500 Ganahl Lumber Company, ouster and fine of ....................................... 5,000 S.J. Gavin Lumber Company, ouster and fine of ....................................... 3,500 Goodfellow Lumber Company, ouster from its authority to do business in this State and a fine of ................................ 3,000 Phillip Gruner Brothers Lumber Company, ouster and fine of ....................... 7,500 Holekamp Lumber Company, ouster and fine of ....................................... 3,500 Mound City Lumber Company, ouster and fine of ....................................... 3,500 O'Neill Lumber Company, ouster and fine of ....................................... 5,000 Prendergast Lumber Company, ouster and fine of .................................. 5,000 H.E. Rapp Lumber Company, ouster and fine of ....................................... 2,500 Julius Seidel Lumber Company, ouster and fine of .................................. 10,000 St. Louis Lumber Company, ouster from its authority to do business in this State and fine of .................................. 10,000 Shallabarger Lumber Company, ouster and fine of .................................. 5,000 Vandeventer Lumber Company, ouster and fine of .................................. 2,500 Wiles-Chipman Lumber Company, ouster and fine of .................................. 10,000 Wilson-Land Lumber Company, ouster and fine of .................................. 2,500 St. Louis Lumber Trade Exchange, ouster only. The costs of this proceeding will be taxed against respondents. *Page 549 Judgment will be entered in accordance with this opinion.Woodson, C.J., and Graves, Walker and Ragland, JJ., concur;James T. Blair, J., concurs except as to absolute ouster.