322 U.S.

533
64 S.Ct. 1162
88 L.Ed. 1440

UNITED STATES
v.
SOUTH-EASTERN UNDERWRITERS ASS'N et al.
No. 354.
Argued Jan. 11, 1944.
Decided June 5, 1944.
Rehearing Denied Oct. 9, 1944.

See 65 S.Ct. 26.

On Appeal from the District Court of the United States for the Northern
District of Georgia.
Mr. Francis Biddle, Atty. Gen., for appellant.
Messrs. John T. Cahill, of New York City, and Dan MacDougald, of
Atlanta, Ga., for appellees.
Mr. Justice BLACK delivered the opinion of the Court.

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

Appelleesthe South-Eastern Underwriters Association (S.E.U.A.), and its

Appelleesthe South-Eastern Underwriters Association (S.E.U.A.), and its

membership of nearly 200 private stock fire insurance companies, and 27
individualswere indicted in the District Court for alleged violations of the
Sherman Anti-Trust Act. The indictment alleges two conspiracies. The first, in
violation of 1 of the Act, was to restrain interstate trade and commerce by
fixing and maintaining arbitrary and non-competitive premium rates on fire and
specified 'allied lines'1 of insurance in Alabama, Florida, Georgia, North
Carolina, South Carolina, and Virginia; the second, in violation of 2, was to
monopolize trade and commerce in the same lines of insurance in and among
the same states.2

The indictment makes the following charges: The member companies of

S.E.U.A. controlled 90 per cent of the fire insurance and 'allied lines' sold by
stock fire insurance companies in the six states where the conspiracies were
consummated.3 Both conspiracies consisted of a continuing agreement and
concert of action effectuated through S.E.U.A. The conspirators not only fixed
premium rates and agents' commissions, but employed boycotts together with
other types of coercion and intimidation to force non-member insurance
companies into the conspiracies, and to compel persons who needed insurance
to buy only from S.E.U.A. members on S.E.U.A. terms. Companies not
members of S.E.U.A. were cut off from the opportunity to reinsure their risks,
and their services and facilities were disparaged; independent sales agencies
who defiantly represented non-S.E.U.A. companies were punished by a
withdrawal of the right to represent the members of S.E.U.A.; and persons
needing insurance who purchased from non-S.E.U.A. companies were
threatened with boycotts and withdrawal of all patronage. The two conspiracies
were effectively policed by inspection and rating bureaus in five of the six
states, together with local boards of insurance agents in certain cities of all six
states.

The kind of interference with the free play of competitive forces with which the
appellees are charged is exactly the type of conduct which the Sherman Act has
outlawed for American 'trade or commerce' among the states.4 Appellees5 have
not argued otherwise. Their defense, set forth in a demurrer, has been that they
are not required to conform to the standards of business conduct established by
the Sherman Act because 'the business of fire insurance is not commerce.'
Sustaining the demurrer, the District Court held that 'the business of insurance
is not commerce, either intrastate or interstate;' it 'is not interstate commerce or
interstate trade, though it might be considered a trade subject to local laws,
either State or Federal, where the commerce clause is not the authority relied
upon.' 51 F.Supp. 712, 713, 714.

The District Court's opinion does not contain the slightest intimation that the

The District Court's opinion does not contain the slightest intimation that the
indictment was held defective on a theory that it charged the appellees with
restraining and monopolizing nothing but the making of local contracts. There
was not even a demurrer on that ground. The District Court treated the
indictment as charging illegal restraints of trade in the total 'activities
complained of as constituting the business of insurance.' 51 F.Supp. 712, 713.
And in great detail the indictment set out these total activities, of which the
actual making of contracts was but a part. As recognized by the District Court,
the insurance business described in the indictment included not only the
execution of insurance contracts but also negotiations and events prior to
execution of the contracts and the innumerable transactions necessary to
performance of the contracts. All of these alleged transactions, we shall
hereafter point out, constituted a single continuous chain of events, many of
which were multistate in character, and none of which, if we accept the
allegations of the indictment, could possibly have been continued but for that
part of them which moved back and forth across state lines. True, many of the
activities described in the indictment which constituted this chain of events
might, if conceptually separated from that from which they are inseparable, be
regarded as wholly local. But the District Court in construing the indictment did
not attempt such a metaphysical separation. Looking at all the transactions
charged, it felt compelled by previous decisions of this Court to hold that
despite the interstate character of many of them 'the business of insurance is not
commerce', and that as a consequence this 'business', contracts and all, could
not be 'interstate commerce' or 'interstate trade.' In other words, the District
Court held the indictment bad for the sole reason that the entire 'business of
insurance' (not merely the part of the business in which contracts are physically
executed) can never under any possibly circumstances be 'commerce', and that
therefore, even though an insurance company conducts a substantial part of its
business transactions across state lines, it is not engaged in 'commerce among
the States' within the meaning of either the Commerce Clause or the Sherman
Anti-Trust Act.6 Therefore, to say that the indictment charges nothing more
than restraint and monopoly in the 'mere formation of an insurance contract', as
has been suggested in this Court, is to give it a different and narrower meaning
than did the District Court, something we cannot do consistently with the
Criminal Appeals Act which permits the case to come here on direct appeal.7
The record, then, presents two questions and no others: (1) Was the Sherman
Act intended to prohibit conduct of fire insurance companies which restrains or
monopolizes the interstate fire insurance trade? (2) If so, do fire insurance
transactions which stretch across state lines constitute 'Commerce among the
several States' so as to make them subject to regulation by Congress under the
Commerce Clause? Since it is our conclusion that the Sherman Act was
intended to apply to the fire insurance business we shall, for convenience of

discussion, first consider the latter question.

I.
7

Ordinarily courts do not construe words used in the Constitution so as to give

them a meaning more narrow than one which they had in the common parlance
of the times in which the Constitution was written. To hold that the word
'commerce' as used in the Commerce Clause does not include a business such as
insurance would do just that. Whatever other meanings 'commerce' may have
included in 1787, the dictionaries, encyclopedias, and other books of the period
show that it included trade: businesses in which persons bought and sold,
bargained and contracted.8 And this meaning has persisted to modern times.
Surely, therefore, a heavy burden is on him who asserts that the plenary power
which the Commerce Clause grants to Congress to regulate 'Commerce among
the several States' does not include the power to regulate trading in insurance to
the same extent that it includes power to regulate other trades or businesses
conducted across state lines.9

The modern insurance business holds a commanding position in the trade and
commerce of our Nation. Built upon the sale of contracts of indemnity, it has
become one of the largest and most important branches of commerce.10 Its total
assets exceed $37,000,000,000, or the approximate equivalent of the value of
all farm lands and buildings in the United States.11 Its annual premium receipts
exceed $6,000,000,000, more than the average annual revenue receipts of the
United States Government during the last decade.12 Included in the labor force
of insurance are 524,000 experienced workers, almost as many as seek their
livings in coal mining or automobile manufacturing.13 Perhaps no modern
commercial enterprise directly affects so many persons in all walks of life as
does the insurance business. Insurance touches the home, the family, and the
occupation or the business of almost every person in the United States.14

This business is not separated into 48 distinct territorial compartments which

function in isolation from each other. Interrelationship, interdependence, and
integration of activities in all the states in which they operate are practical
aspects of the insurance companies' methods of doing business. A large share of
the insurance business is concentrated in a comparatively few companies
located, for the most part, in the financial centers of the East.15 Premiums
collected from policyholders in every part of the United States flow into these
companies for investment. As policies become payable, checks and drafts flow
back to the many states where the policyholders reside. The result is a
continuous and indivisible stream of intercourse among the states composed of
collections of premiums, payments of policy obligations, and the countless

documents and communications which are essential to the negotiation and

execution of policy contracts. Individual policyholders living in many different
states who own policies in a single company have their separate interests
blended in one assembled fund of assets upon which all are equally dependent
for payment of their policies. The decisions which that company makes at its
home officethe risks it insures, the premiums it charges, the investments it
makes, the losses it paysconcern not just the people of the state where the
home office happens to be located. They concern people living far beyond the
boundaries of that state.
10

That the fire insurance transactions alleged to have been restrained and
monopolized by appellees fit the above-described pattern of the national
insurance trade is shown by the indictment before us. Of the nearly 200
combining companies, chartered in various states and foreign countries, only 18
maintained their home offices in one of the six states in which the S.E.U.A.
operated; and 127 had headquarters in either New York, Pennsylvania, or
Connecticut. During the period 19311941 a total of $488,000,000 in
premiums was collected by local agents in the six states, most of which was
transmitted to home offices in other states; while during the same period
$215,000,000 in losses was paid by checks or drafts sent from the home offices
to the companies' local agents for delivery to the policy holders.16 Local agents
solicited prospects, utilized policy forms sent from home offices, and made
regular reports to their companies by mail, telephone or telegraph. Special
travelling agents supervised local operations. The insurance sold by members
of S.E.U.A. covered not only all kinds of fixed local properties, but also such
properties as steamboats, tugs, ferries, shipyards, warehouses, terminals, trucks,
busses, railroad equipment and rolling stock, and movable goods of all types
carried in interstate and foreign commerce by every media of transportation.

11

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

12

In 1869 this Court held, in sustaining a statute of Virginia which regulated

foreign insurance companies, that the statute did not offend the Commerce
Clause because 'issuing a policy of insurance is not a transaction of commerce.'
Paul v. Virginia, 8 Wall. 168, 183, 19 L.Ed. 357.17 Since then, in similar cases,
this statement has been repeated, and has been broadened. In Hooper v.
California, 155 U.S. 648, 654, 655, 15 S.Ct. 207, 210, 39 L.Ed. 297, decided in

1895, the Paul statement was reaffirmed, and the Court added that, 'The
business of insurance is not commerce.' In 1913 the New York Life Insurance
Company, protesting against a Montana tax, challenged these broad statements,
strongly urging that its business, at least, was so conducted as to be engaged in
interstate commerce. But the Court again approved the Paul statement and held
against the company, saying that 'contracts of insurance are not commerce at
all, neither state nor interstate.' New York Life Insurance Company v. Deer
Lodge County, 231 U.S. 495, 503, 504, 510, 34 S.Ct. 167, 169, 170, 172, 58
L.Ed. 332. 18
13

In all cases in which the Court has relied upon the proposition that 'the business
of insurance is not commerce', its attention was focused on the validity of state
statutesthe extent to which the Commerce Clause automatically deprived
states of the power to regulate the insurance business. Since Congress had at no
time attempted to control the insurance business, invalidation of the state
statutes would practically have been equivalent to granting insurance companies
engaged in interstate activities a blanket license to operate without legal
restraint. As early as 1866 the insurance trade, though still in its infancy,19 was
subject to widespread abuses.20 To meet the imperative need for correction of
these abuses the various state legislatures, including that of Virginia, passed
regulatory legislation.21 Paul v. Virginia upheld one of Virginia's statutes. To
uphold insurance laws of other states, including tax laws, Paul v. Virginia's
generalization and reasoning have been consistently adhered to.

14

Today, however, we are asked to apply this reasoning, not to uphold another
state law, but to strike down an Act of Congress which was intended to regulate
certain aspects of the methods by which interstate insurance companies do
business; and, in so doing, to narrow the scope of the federal power to regulate
the activities of a great business carried on back and forth across state lines. But
past decisions of this Court emphasize that legal formulae devised to uphold
state power cannot uncritically be accepted as trustworthy guides to determine
Congressional power under the Commerce Clause.22 Furthermore, the reasons
given in support of the generalization that 'the business of insurance is not
commerce' and can never be conducted so as to constitute 'Commerce among
the States' are inconsistent with many decisions of this Court which have
upheld federal statutes regulating interstate commerce under the Commerce
Clause. 23

15

One reason advanced for the rule in the Paul case has been that insurance
policies 'are not commodities to be shipped or forwarded from one State to
another.'24 But both before and since Paul v. Virginia this Court has held that
Congress can regulate traffic though it consist of intangibles.25 Another reason

much stressed has been that insurance policies are mere personal contracts
subject to the laws of the state where executed. But this reason rests upon a
distinction between what has been called 'local' and what 'interstate', a type of
mechanical criterion which this Court has not deemed controlling in the
measurement of federal power. Cf. Wickard v. Filburn, 317 U.S. 111, 119, 120,
63 S.Ct. 82, 86, 87, 87 L.Ed. 122; Parker v. Brown, 317 U.S. 341, 360, 63 S.Ct.
307, 318, 87 L.Ed. 315. We may grant that a contract of insurance, considered
as a thing apart from negotiation and execution, does not itself constitute
interstate commerce. Cf. Hall v. Geiger-Jones Co., 242 U.S. 539, 557, 558, 37
S.Ct. 217, 223, 224, 61 L.Ed. 480, L.R.A.1917F, 514, Ann.Cas.1917C, 643.
But it does not follow from this that the Court is powerless to examine the
entire transaction, of which that contract is but a part, in order to determine
whether there may be a chain of events which becomes interstate commerce.26
Only by treating the Congressional power over commerce among the states as a
'technical legal conception' rather than as a 'practical one, drawn from the
course of business' could such a conclusion be reached. Swift & Co. v. United
States, 196 U.S. 375, 398, 25 S.Ct. 276, 280, 49 L.Ed. 518. In short, a
nationwide business is not deprived of its interstate character merely because it
is built upon sales contracts which are local in nature. Were the rule otherwise,
few businesses could be said to be engaged in interstate commerce.27
16

Another reason advanced to support the result of the cases which follow Paul v.
Virginia has been that, if any aspects of the business of insurance be treated as
interstate commerce, 'then all control over it is taken from the states and the
legislative regulations which this court has heretofore sustained must be
declared invalid.'28 Accepted without qualification, that broad statement is
inconsistent with many decisions of this Court. It is settled that, for
Constitutional purposes, certain activities of a business may be intrastate and
therefore subject to state control, while other activities of the same business
may be interstate and therefore subject to federal regulation.29 And there is a
wide range of business and other activities which, though subject to federal
regulation, are so intimately related to local welfare that, in the absence of
Congressional action, they may be regulated or taxed by the states.30 In
marking out these activities the primary test applied by the Court is not the
mechanical one of whether the particular activity affected by the state
regulation is part of interstate commerce, but rather whether, in each case, the
competing demands of the state and national interests involved can be
accommodated.31 And the fact that particular phases of an interstate business or
activity have long been regulated or taxed by states has been recognized as a
strong reason why, in the continued absence of conflicting Congressional
action, the state regulatory and tax laws should be declared valid.32

17

The real answer to the question before us is to be found in the Commerce

Clause itself and in some of the great cases which interpret it. Many decisions
make vivid the broad and true meaning of that clause. It is interstate commerce
subject to regulation by Congress to carry lottery tickets from state to state.
Lottery Case (Champion v. Ames), 188 U.S. 321, 355, 23 S.Ct. 321, 326, 47
L.Ed. 492. So also is it interstate commerce to transport a woman from
Louisiana to Texas in a common carrier, Hoke v. United States, 227 U.S. 308,
320323, 33 S.Ct. 281, 283, 284, 57 L.Ed. 523, 43 L.R.A.,N.S., 906,
Am.Cas.1913E, 905; to carry across a state line in a private automobile five
quarts of whiskey intended for personal consumption, United States v.
Simpson, 252 U.S. 465, 40 S.Ct. 364, 64 L.Ed. 665, 10 A.L.R. 510; to drive a
stolen automobile from Iowa to South Dakota, Brooks v. United States, 267
U.S. 432, 436439, 45 S.Ct. 345, 346, 347, 69 L.Ed. 699, 37 A.L.R. 1407.
Diseased cattle ranging between Georgia and Florida are in commerce,
Thornton v. United States, 271 U.S. 414, 425, 46 S.Ct. 585, 588, 70 L.Ed.
1013; and the transmission of an electrical impulse over a telegraph line
between Alabama and Florida is intercourse and subject to paramount federal
regulation, Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S.
1, 11, 24 L.Ed. 708. Not only, then, may transactions be commerce though noncommercial; they may be commerce though illegal and sporadic, and though
they do not utilize common carriers or concern the flow of anything more
tangible than electrons and information. These activities having already been
held to constitute interstate commerce, and persons engaged in them therefore
having been held subject to federal regulation, it would indeed be difficult now
to hold that no activities of any insurance company can ever constitute
interstate commerce so as to make it subject to such regulation;activities
which, as part of the conduct of a legitimate and useful commercial enterprise,
may embrace integrated operations in many states and involve the transmission
of great quantities of money, documents, and communications across dozens of
state lines.

18

The precise boundary between national and state power over commerce has
never yet been, and doubtless never can be, delineated by a single abstract
definition.33 The most widely accepted general description of that part of
commerce which is subject to the federal power is that given in 1824 by Chief
Justice Marshall in Gibbons v. Ogden, 9 Wheat. 1, 189, 190, 6 L.Ed. 23:
'Commerce, undoubtedly, is traffic, but it is something moreit is intercourse.
It describes the commercial intercourse between nations, and parts of nations in
all its branches * * *.' Commerce is interstate, he said, when it 'concerns more
states than one.' Id., 9 Wheat. 194, 6 L.Ed. 23. No decision of this Court has
ever questioned this as too comprehensive a description of the subject matter of
the Commerce Clause.34 To accept a description less comprehensive, the Court

has recognized, would deprive the Congress of that full power necessary to
enable it to discharge its Constitutional duty to govern commerce among the
states. 35
19

The power confided to Congress by the Commerce Clause is declared in The

Federalist to be for the purpose of securing the 'maintenance of harmony and
proper intercourse among the States.'36 But its purpose is not confined to
empowering Congress with the negative authority to legislate against state
regulations of commerce deemed inimical to the national interest. The power
granted Congress is a positive power. It is the power to legislate concerning
transactions which, reaching across state boundaries, affect the people of more
states than one;to govern affairs which the individual states, with their
limited territorial jurisdictions, are not fully capable of governing.37 This federal
power to determine the rules of intercourse across state lines was essential to
weld a loose confederacy into a single, indivisible nation; its continued
existence is equally essential to the welfare of that nation.38

20

Our basic responsibility in interpreting the Commerce Clause is to make certain

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

II.
21

We come then to the contention, earnestly pressed upon us by appellees, that

Congress did not intend in the Sherman Act to exercise its power over the
interstate insurance trade.

22

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

engaged in business whose activities might restrain or monopolize commercial

intercourse among the states.
23

A general application of the Act to all combinations of business and capital

organized to suppress commercial competition is in harmony with the spirit and
impulses of the times which gave it birth. 'Trusts' and 'monopolies' were the
terror of the period.39 Their power to fix prices, to restrict production, to crush
small independent traders, and to concentrate large power in the few to the
detriment of the many, were but some of numerous evils ascribed to them.40
The organized opponents of trusts aimed at the complete destruction of all
business combinations which possessed potential power, or had the intent, to
destroy competition in whatever the people needed or wanted.41 So great was
the strength of the anti-trust forces that the issue of trusts and monopolies
became non-partisan. The question was not whether they should be abolished,
but how this purpose could best be accomplished.42

24

Combinations of insurance companies were not exempt from public hostility

against the trusts. Between 1885 and 1912, twenty-three states enacted laws
forbidding insurance combinations.43 When, in 1911, one of these state statutes
was unsuccessfully challenged in this Court, the Court had this to say: 'We can
well understand that fire insurance companies, acting together, may have
owners of property practically at their mercy in the matter of rates, and may
have it in their power to deprive the public generally of the advantages flowing
from competition between rival organizations engaged in the business of fire
insurance. In order to meet the evils of such combinations or associations, the
state is competent to adopt appropriate regulations that will tend to substitute
competition in the place of combination or monopoly.' German Alliance Ins.
Co. v. Hale, 219 U.S. 307, 316, 31 S.Ct. 246, 248, 55 L.Ed. 229.44

25

Appellees argue that the Congress knew, as doubtless some of its members did,
that this Court had prior to 1890 said that insurance was not commerce and was
subject to state regulation, and that therefore we should read the Act as though
it expressly exempted that business. But neither by reports nor by statements of
the bill's sponsors or others was any purpose to exempt insurance companies
revealed. And we fail to find in the legislative history of the Act an expression
of a clear and unequivocal desire of Congress to legislate only within that area
previously declared by this Court to be within the federal power.45 Cf.
Helvering v. Griffths, 318 U.S. 371, 63 S.Ct. 636, 87 L.Ed. 843; Parker v.
Motor Boat Sales, 314 U.S. 244, 62 S.Ct. 221, 86 L.Ed. 184. We have been
shown not one piece of reliable evidence that the Congress of 1890 intended to
freeze the proscription of the Sherman Act within the mold of then current
judicial decisions defining the commerce power. On the contrary, all the

acceptable evidence points the other way. That Congress wanted to go to the
utmost extent of its Constitutional power in restraining trust and monopoly
agreements such as the indictment here charges admits of little, if any, doubt.46
The purpose was to use that power to make of ours, so far as Congress could
under our dual system, a competitive business economy.47 Nor is it sufficient to
justify our reading into the Act an exemption for insurance that the Congress of
1890 may have known that states already were regulating the insurance
business. The Congress of 1890 also knew that railroads were subject to
regulation not only by states but by the federal government itself, but this fact
has been held insufficient to bring to the railroad companies the interpretative
exemption from the Sherman Act they have sought. United States v. TransMissouri Freight Association, 166 U.S. 290, 314, 315, 320325, 17 S.Ct. 540,
548, 549, 551553, 41 L.Ed. 1007.
26

Appellees further argue that, quite apart from what the Sherman Act meant in
1890, the succeeding Congresses have accepted and approved the decisions of
this Court that the business of insurance is not commerce. They call attention to
the fact that at various times since 1890 Congress has refused to enact
legislation providing for federal regulation of the insurance business, and that
several resolutions proposing to amend the Constitution specifically to
authorize federal regulation of insurance have failed of passage. In addition,
they emphasize that, although the Sherman Act has been amended several
times, no amendments have been adopted which specifically bring insurance
within the Act's proscription. The Government, for its part, points to evidence
that various members of Congress during the period 19001914 considered
there were 'trusts' in the insurance business, and expressed the view that the
insurance business should be subject to the antitrust laws.48 It also points out
that in the Merchant Marine Act of 1920 Congress specifically exempted
certain conduct of marine insurance companies from the 'anti-trust' laws.49

27

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

of destroying competition by coercive and intimidatory practices.

28

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

29

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

30

'But even if the court shared the gloomy forebodings in which the defendants
indulge, it could not refuse to respect the action of the legislative branch of the
government if what it has done is within the limits of its constitutional power.
The suggestions of disaster to business have, we apprehend, their origin in the
zeal of parties who are opposed to the policy underlying the act of Congress or
are interested in the result of this particular case; at any rate, the suggestions
imply that the court may and ought to refuse the enforcement of the provisions
of the act if, in its judgment, Congress was not wise in prescribing as a rule by
which the conduct of interstate and international commerce is to be governed,
that every combination, whatever its form, in restraint of such commerce and
the monopolizing or attempting to monopolize such commerce, shall be illegal.
These, plainly, are questions as to the policy of legislation which belong to
another department, and this court has no function to supervise such legislation
from the standpoint of wisdom or policy. * * *' Harlan, J., affirming decree,
Northern Securities Co. v. United States, 193 U.S. 197, 351, 352, 24 S.Ct. 436,
462, 48 L.Ed. 679.

31

The argument that the Sherman Act necessarily invalidates many state laws
regulating insurance we regard as exaggerated. Few states go so far as to permit
private insurance companies, without state supervision, to agree upon and fix
uniform insurance rates. Cf. Parker v. Brown, 317 U.S. 341, 350352, 63
S.Ct. 307, 313, 314, 87 L.Ed. 315. No states authorize combinations of
insurance companies to coerce, intimidate, and boycott competitors and
consumers in the manner here alleged, and it cannot be that any companies

have acquired a vested right to engage in such destructive business practices.50

32

Reversed.

33

Mr. Justice ROBERTS and Mr. Justice REED took no part in the consideration
or decision of this case.

34

Mr. Chief Justice STONE, dissenting.

35

This Court has never doubted, and I do not doubt, that transactions across state
lines which often attend and are incidental to the formation and performance of
an insurance contract, such as the use of facilities for interstate communication
and transportation, are acts of interstate commerce subject to regulation by the
federal government under the commerce clause. Nor do I doubt that the
business of insurance as presently conducted has in many aspects such
interstate manifestations and such effects on interstate commerce as may
subject it to the appropriate exercise of federal power. See Polish National
Alliance v. National Labor Relations Board, 322 U.S. 643, 64 S.Ct. 1196.

36

But such are not the questions now before us. We are not concerned here with
the power of Congress to do what it has not attempted to do, but with the
question whether Congress in enacting the Sherman Act, 15 U.S.C.A. 17,
15 note, has asserted its power over the business of insurance.

37

The questions which the Government has raised, advisedly it would seem (cf.
New York Life Insurance Co. v. Deer Lodge County, 231 U.S. 495, 499, 34
S.Ct. 167, 168, 58 L.Ed. 332), by the indictment in this case, as it has been
interpreted by the District Court below, are quite different from the question,
discussed in the Court's opinion, whether the incidental use of the facilities of
interstate commerce and transportation in the conduct of the fire insurance
business renders the business itself 'commerce' within the meaning of the
Sherman Act and the commerce clause. The questions here are whether the
business of entering into contracts in one state, insuring against the risk of loss
by fire of property in others, is itself interstate commerce; and whether an
agreement or conspiracy to fix the premium rates of such contracts and in other
ways to restrict competition in effecting policies of fire insurance, violates the
Sherman Act. The court below has answered 'no' to both of these questions. I
think that its answer is right and its judgment should be affirmed, both on
principle and in view of the permanency which should be given to the
construction of the commerce clause and the Sherman Act in this respect,
which has until now been consistently adhered to by all branches of the

Government.
38

The case comes here on direct appeal by the Government from the District
Court's judgment dismissing the indictment. Under the provisions of the
Criminal Appeals Act, 18 U.S.C. 682, 18 U.S.C.A. 682, the only questions
open for decision here are whether the District Court's constructions of the
commerce clause and of the Sherman Act, on which it rested its decision, are
the correct ones. United States v. Borden Co., 308 U.S. 188, 193, 60 S.Ct. 182,
186, 84 L.Ed. 181; United States v. Wayne Pump Co., 317 U.S. 200, 208, 63
S.Ct. 191, 196, 87 L.Ed. 184; United States v. Swift & Co., 318 U.S. 442, 444,
63 S.Ct. 684, 685, 87 L.Ed. 889.

39

For the particular facts to which the court below applied the Constitution and
the Sherman Act we must look to the indictment as the District Court has
construed it. And we must accept that construction, for by the provisions of the
Criminal Appeals Act the District Court's construction of the indictment is
reviewable on appeal not by this Court but by the Circuit Court of Appeals.
United States v. Patten, 226 U.S. 525, 535, 33 S.Ct. 141, 142, 57 L.Ed. 333, 44
L.R.A.,N.S., 325; United States v. Colgate & Co., 250 U.S. 300, 306, 39 S.Ct.
465, 467, 63 L.Ed. 992, 7 A.L.R. 443; United States v. Borden Co., supra.

40

The District Court pointed out that the offenses charged by the indictment are a
conspiracy to fix arbitrary and non-competitive premium rates on fire insurance
sold in several named states, and by means of that conspiracy to restrain and to
monopolize trade and commerce in fire insurance in those states. The court
went on to say (51 F.Supp. 713):

41

'To constitute a violation of the Sherman Act, the restraint and monopoly
denounced must be that of interstate trade or commerce, and, unless the
restraint and monopoly charged in the indictment be restraint or monopoly in
interstate trade or commerce the indictment must fall.

42

'It is not a question here of whether the defendants participated in some

incidental way in interstate commerce or used in some instances the facilities of
interstate commerce, but is rather whether the activities complained of as
constituting the business of insurance would themselves constitute interstate
trade or commerce, and whether defendants' method of conducting same
amounted to restraint or monopoly of same. It is not a question as to whether or
not Congress had power to regulate the insurance companies or some phase of
their activities, but rather whether Congress did so by the Sherman Act.

43

'Persons may be engaged in interstate commerce, yet, if the restraint or

monopoly complained of is not itself a restraint or monopoly of interstate trade
or commerce, they may not be convicted of violation of the Sherman Act. The
fact that they may use the mails and instrumentalities of interstate commerce
and communication, and be subject to Federal regulations relating thereto,
would not make applicable the Sherman Act to intrastate commerce or to
activities which were not commerce at all.

44

'The whole case, therefore, depends upon the question as to whether or not the
business of insurance is interstate trade or commerce, and if so, whether the
transactions alleged in the indictment constitute interstate commerce.'

45

In short the District Court construed the indictment as charging restraints not in
the incidental use of the mails or other instrumentalities of interstate commerce,
nor in the insurance of goods moving in interstate commerce, but in the
'business of insurance.' And by the 'business of insurance' it necessarily meant
the business of writing contracts of insurance, for the indictment charges only
restraints in entering into such contracts, not in their performance,1 and the
Court deemed it irrelevant that in the negotiation and performance of the
contracts appellees 'may use the mails and instrumentalities of interstate
commerce.' It held that that business is not in itself interstate commerce, and
that the alleged conspiracies to restrain and to monopolize that business were
not, without more, in restraint of interstate commerce and consequently were
not violations of the Sherman Act.

46

This construction of the indictment as confined in its scope to a conspiracy to

fix premium rates and otherwise restrain competition in the business of writing
insurance contracts, and to monopolize that businessa construction requiring
decision of the question whether that business is interstate commerceis
adopted by the Government. Its brief in this Court states the 'questions
presented' as follows:

47

'1. Whether the fire insurance business is in commerce.

48

'2. Whether the fire insurance business is subject to the constitutional power of
Congress to regulate commerce among the several states.

49

'3. Whether, if so, the Sherman Act is violated by an agreement among fire
insurance companies to fix and maintain arbitrary and non-competitive rates
and to monopolize trade and commerce in fire insurance, in part through
boycotts directed at companies not part of the conspiracy and the agents and

purchasers of insurance who deal with them.' The numerous and unvarying
decisions of this Court that 'insurance is not commerce'2 have never denied that
acts of interstate commerce may be incidental to the business of writing and
performing contracts of insurance, or that those incidental acts are subject to the
commerce power. Our decisions on this subject have uniformly rested on the
ground that the formation of an insurance contract, even though it insures
against risk of loss to property located in other states or moving in interstate
commerce, is not interstate commerce, and that although the incidents of
interstate communication and transportation which often attend the formation
and performance of an insurance contract are interstate commerce, they do not
serve to render the business of insurance itself interstate commerce. See Hooper
v. California, 155 U.S. 648, 655, 15 S.Ct. 207, 210, 39 L.Ed. 297; New York
Life Ins. Co. v. Deer Lodge County, 231 U.S. 495, 508, 509, 34 S.Ct. 167, 171,
172, 58 L.Ed. 332.
50

If an insurance company in New York executes and delivers, either in that state
or another, a policy insuring the owner of a building in New Jersey against loss
by fire, no act of interstate commerce has occurred. True, if the owner comes to
New York to procure the insurance or after delivery in New York carries the
policy to New Jersey, or the company sends it there by mail or messenger, such
would be acts of interstate commerce. Similarly if the owner pays the
premiums by mail to the company in New York, or the company's New Jersey
agent sends the premiums to New York, or the company in New York sends
money to New Jersey on the occurrence of the loss insured against, acts of
interstate commerce would occur. But the power of the Congress to regulate
them is derived, not from its authority to regulate the business of insurance, but
from its power to regulate interstate communication and transportation. And
such incidental use of the facilities of interstate commerce does not render the
insurance business itself interstate commerce. Nor is the nature of a single
insurance transaction or a few such transactions not involving interstate
commerce altered in that regard merely because their number is multiplied. The
power of Congress to regulate interstate communication and transportation
incidental to the insurance business is not any more or any less because the
number of insurance transactions is great or small. The Congressional power to
regulate does not extend to the formation and performance of insurance
contracts save only as the latter may affect communication and transportation
which are interstate commerce or may otherwise be found by Congress to affect
transactions of interstate commerce. And even then, such effects on the
commerce as do not involve restraints in competition in the marketing of goods
and services are not within the reach of the Sherman Act. That such are the
controlling principles has been fully recognized by this Court in the numerous
cases which have held that the business of insurance is not commerce or as such

subject to the commerce power. See, for example, New York Life Ins. Co. v.
Deer Lodge County, supra, 231 U.S. 508, 509, 34 S.Ct. 171, 172, 58 L.Ed. 332.
51

These principles are not peculiar to insurance contracts. They are equally
applicable to other types of contracts which relate to things or events in other
states than that of their execution, but which do not contain any obligation to
engage in any form of interstate commerce. The parties to them are not engaged
in interstate commerce, for such commerce is not necessarily involved in or
prerequisite to the formation of such contracts and they do not in their
performance necessarily involve the doing of interstate business. The mere
formation of a contract to sell and deliver cotton or coal or crude rubber is not
in itself an interstate transaction and does not involve any act of interstate
commerce because cotton, coal and crude rubber are subjects of interstate or
foreign commerce, or because in fact performance of the contract may not be
effected without some precedent or subsequent movement interstate of the
commodities sold, or because there may be incidental use of the facilities of
interstate commerce or transportation in the formation of the contract. Ware &
Leland v. Mobile County, 209 U.S. 405, 411413, 28 S.Ct. 526, 528, 529, 52
L.Ed. 855, 14 Ann.Cas. 1031; Western Live Stock Co. v. Bureau of Internal
Revenue, 303 U.S. 250, 253, 58 S.Ct. 546, 547, 82 L.Ed. 823, 115 A.L.R. 944.
Compare Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 292, 42
S.Ct. 106, 109, 66 L.Ed. 239. That the principle underlying that conclusion is
the same as that underlying the decisions of this Court that the business of
insurance is not interstate commerce, has been repeatedly recognized and
affirmed. Paul v. Virginia, 8 Wall. 168, 183, 19 L.Ed. 357; Hooper v.
California, 155 U.S. 648, 654, 15 S.Ct. 207, 210, 39 L.Ed. 297; Ware & Leland
v. Mobile County, supra, 209 U.S. 411, 28 S.Ct. 528, 52 L.Ed. 855, 14
Ann.Cas. 1031; Engel v. O'Malley, 219 U.S. 128, 139, 31 S.Ct. 190, 193, 55
L.Ed. 128; New York Life Ins. Co. v. Deer Lodge County, supra, 231 U.S. 511,
512, 34 S.Ct. 173, 58 L.Ed. 332; Blumenstock Bros. Advertising Agency v.
Curtis Pub. Co., 252 U.S. 436, 443, 40 S.Ct. 385, 387, 64 L.Ed. 649; Hill v.
Wallace, 259 U.S. 44, 69, 42 S.Ct. 453, 458, 66 L.Ed. 822; Board of Trade v.
Olsen, 262 U.S. 1, 32, 33, 43 S.Ct. 470, 475, 476, 67 L.Ed. 839; Moore v. New
York Cotton Exchange, 270 U.S. 593, 604, 46 S.Ct. 367, 369, 70 L.Ed. 750, 45
A.L.R. 1370; Western Livestock Co. v. Bureau of Internal Revenue, supra; and
see Hopkins v. United States, 171 U.S. 578, 588, 589, 602, 19 S.Ct. 40, 43, 44,
49, 43 L.Ed. 290.

52

The conclusion that the business of writing insurance is not interstate

commerce could not rightly be otherwise unless we were to depart from the
universally accepted view that the act of making any contract which does not
stipulate for the performance of an act or transaction of interstate commerce is

not in itself interstate commerce. And this has been held to be true even though
the contract be effected by exchange of communications across state lines, see
New York Life Ins. Co. v. Cravens, 178 U.S. 389, 400, 20 S.Ct. 962, 967, 44
L.Ed. 1116; Ware & Leland v. Mobile County, supra; New York Life Ins. Co.
v. Deer Lodge County, supra, 231 U.S. 509, 34 S.Ct. 172, 58 L.Ed. 332, a point
which need not be considered here for the indictment makes no charge that the
policies written by appellees are thus effected, but alleges only that they are
'sold' by the defendants in certain named states.
53

Undoubtedly contracts so entered into for the sale of commodities which move
in interstate commerce may become the implements for restraints in marketing
those commodities, and when so used may for that reason be within the
Sherman Act, see Northern Securities Co. v. United States, 193 U.S. 197, 334,
338, 24 S.Ct. 436, 455, 457, 48 L.Ed. 679; United States v. Patten, supra, 226
U.S. 543, 544, 33 S.Ct. 145, 146, 57 L.Ed. 333, 44 L.R.A.,N.S., 325; Standard
Oil Co. v. United States, 283 U.S. 163, 168, 169, 51 S.Ct. 421, 423, 75 L.Ed.
926. Compare Thames & Mersey Marine Ins. Co. v. United States, 237 U.S.
19, 35 S.Ct. 496, 59 L.Ed. 821, Ann.Cas.1915D, 1087. But it is quite another
matter to say that the contracts are themselves interstate commerce or that
restraints in competition as to their terms or conditions are within the Sherman
Act, in the absence of a showing that the purpose or effect is to restrain
competition in the marketing of the goods or services to which the contracts
relate. Compare Hill v. Wallace, supra, 259 U.S. 69, 42 S.Ct. 458, 66 L.Ed.
822, with Board of Trade of City of Chicago v. Olsen, supra, 262 U.S. 3133,
43 S.Ct. 475, 476, 67 L.Ed. 839; Blumenstock Bros. Advertising Agency v.
Curtis Pub. Co., supra, with Indiana Farmers' Guide Pub. Co. v. Prairie Co.,
293 U.S. 268, 55 S.Ct. 182, 79 L.Ed. 356; Moore v. New York Cotton
Exchange, supra, with United States v. Patten, supra.

54

In this respect insurance contracts do not in point of law stand on any different
footing as regards the Sherman Act. If contracts of insurance are in fact made
the instruments of restraint in the marketing of goods and services in or
affecting interstate commerce, they are not beyond the reach of the Sherman
Act more than contracts for the sale of commodities,contracts which, not in
themselves interstate commerce, may nevertheless be used as the means of its
restraint. But since trade in articles of commerce is not the subject matter of
contracts of insurance, it is evident that not only is the writing of insurance
policies not interstate commerce but there is little scope for their use in
restraining competition in the marketing of goods and services in or affecting
the commerce.

55

The contract of insurance makes no stipulation for the sale or delivery of

commodities in interstate commerce or for any other interstate transaction. It

provides only for the payment of a sum of money in the event of the loss
insured against and it is no necessary consequence of the alleged restraints on
competition in fixing premiums, that interstate commerce will be restrained.
We have no occasion to consider the argument which the court below rejected,
that the indictment charges that the conspiracy to fix premiums adversely
affects interstate commerce because in some instances the commodities insured
move across state lines, or because interstate communication and transportation
are in some instances incidental to the business of issuing insurance contracts.
This is so both because, as we have said, we are bound by the District Court's
construction of the indictment, and, more importantly, because such effects on
interstate commerce, as will presently appear, are not within the reach of the
Sherman Act.
56

The conclusion seems inescapable that the formation of insurance contracts,

like many others, and the business of so doing, is not, without more, commerce
within the protection of the commerce clause of the Constitution and thereby,
in large measure, excluded from state control and regulation. See Hooper v.
California, supra, 155 U.S. 655, 15 S.Ct. 210, 39L.Ed. 297; New York Life
Insurance Co. v. Deer Lodge County, supra. This conclusion seems, upon
analysis, not only correct on principle and in complete harmony with the
uniform rulings by which this Court has held that the formation of all types of
contract which do not stipulate for the performance of acts of interstate
commerce, are likewise not interstate commerce, but it has the support of an
unbroken line of decisions of this Court beginning with Paul v. Virginia,
seventy-five years ago, and extending down to the present time. In 1913 this
Court was asked, on elaborate briefs and arguments, such as are now addressed
to us, to overrule Paul v. Virginia, supra, and the many cases which have
followed it. New York Life Insurance Co. v. Deer Lodge County, supra. See
also New York Life Insurance Co. v. Cravens, supra. In the Deer Lodge case
the mode of conducting the insurance business was almost identical with that
alleged here (231 U.S. at 499, 500, 34 S.Ct. 168, 169, 58 L.Ed. 332); it was
strenuously urged, as here, that by reason of the great size of insurance
companies 'modern life insurance had taken on essentially a national and
international character' (231 U.S. at page 507, 34 S.Ct. at page 171, 58 L.Ed.
332); and, as here, that the use of the mails incident to the formation of the
contract and the interstate transmission of premiums and the proceeds of the
policies 'constitute a 'current of commerce among the states" (231 U.S. at page
509, 34 S.Ct. at page 172, 58 L.Ed. 332). All these arguments were rejected,
and the business of insurance was held not to be interstate commerce, on the
grounds which we have stated and think validbut which the Government's
brief and the opinion of the Court in this case have failed to notice.

57

If the business of entering into insurance contracts is not interstate commerce, it

seems plain that agreements to fix premium rates, or other restraints on
competition in entering into such contracts, are not violations of the Sherman
Act. As we have often had occasion to point out, the restraints prohibited by the
Sherman Act are of competition in the marketing of goods or services whenever
the competition occurs in or affects interstate commerce in those goods or
services. See Apex Hosiery Co. v. Leader, 310 U.S. 469, 495-501, 60 S.Ct. 982,
993996, 84 L.Ed. 1311, 128 A.L.R. 1044, and cases cited. The contract of
insurance does not undertake to supply or market goods or services and there is
no suggestion that policies of insurance when issued are articles of commerce
or that after their issue they are sold in the market as such, or, if they were, that
the formation of the contract would itself be interstate commerce. See Hooper
v. California, supra; New York Life Ins. Co. v. Deer Lodge County, supra, 231
U.S. 510, 34 S.Ct. 172, 58 L.Ed. 332; cf. Ware & Leland v. Mobile County,
supra; Moore v. New York Cotton Exchange, supra.

58

No more does the performance of an insurance contract involving the payment

of premiums by the insured and the payment of losses by the insurer involve
the marketing of goods or services. The indictment here, as the District Court
pointed out, charges restraints on competition in fixing the terms and conditions
of insurance contracts. And even if we assume, although the District Court did
not mention it, that the indictment also charges restraints on the performance of
such contracts, it is plain that such restrains on the performance as well as the
formation of the contracts cannot operate as restraints on competition in the
marketing of goods or services. Such restraints are not within the purview of
the Sherman Act. Compare Federal Base Ball Club v. National League, 259
U.S. 200, 209, 42 S.Ct. 465, 466, 66 L.Ed. 898, 26 A.L.R. 357; United Mine
Workers v. Coronado Coal Co., 259 U.S. 344, 410, 411, 42 S.Ct. 570, 583, 66
L.Ed. 975, 27 A.L.R. 762; Blumenstock Bros. Advertising Agency v. Curtis
Pub. Co., supra; Moore v. New York Cotton Exchange, supra. The practice of
law is not commerce, nor, at least outside the District of Columbia, is it subject
to the Sherman Act, and it does not become so because a law firm attracts
clients from without the state or sends its members or juniors to other states to
argue cases, or because its clients use the interstate mails to pay their fees.
Federal Base Ball Club v. National League, supra.

59

It would be strange, indeed, if Congress, in adopting the Sherman Act in 1890,

more than twenty years after this Court had supposedly settled the question,
had considered that the business of insurance was interstate commerce or had
contemplated that the Sherman Act was to apply to it. Nothing in its legislative
history suggests that it was intended to apply to the business of insurance.3 The
legislative materials indicate that Congress was primarily concerned with

restraints of competition in the marketing of goods sold in interstate commerce,

which were clearly within the federal commerce power.4 And while the Act is
not limited to restraints of commerce in physical goods, see, e.g., Atlantic
Cleaners & Dyers v. United States, 286 U.S. 427, 52 S.Ct. 607, 76 L.Ed. 1204,
there is no reason to suppose that Congress intended the Act to apply to matters
in which, under prevailing decisions of this Court, commerce was not involved.
On the contrary the House committee, in reporting the bill which was adopted
without change, declared: 'No attempt is made to invade the legislative
authority of the several States or even to occupy doubtful grounds. No system
of laws can be devised by Congress alone which would effectually protect the
people of the United States against the evils and oppression of trusts and
monopolies. Congress has no authority to deal, generally, with the subject
within the States, and the States have no authority to legislate in respect of
commerce between the several States or with foreign nations.'5
60

In 1904 and again in 1905 President Roosevelt urged 'that the Congress
carefully consider whether the power of the Bureau of Corporations cannot
constitutionally be extended to cover interstate transactions in insurance'.6 The
American Bar Association, executives of leading insurance companies, and
others, joined in the request.7 Numerous bills providing for federal regulation
of various aspects of the insurance business were introduced between 1902 and
19068 but the judiciary committees of both House and Senate concluded that
the regulation of the business of marine, fire and life insurance was beyond
Congressional power. Sen. Rep. No. 4406, 59th Cong., 1st Sess.; H.R. Rep.
No. 2491, 59th Cong., 1st Sess., 12-25. The House committee stated that 'the
question as to whether or not insurance is commerce has passed beyond the
realm of argument, because the Supreme Court of the United States has said
many times for a great number of years that insurance is not commerce.' P. 13.9

61

And when in 1914, one year after the decision in New York Life Insurance Co.
v. Deer Lodge County, supra, Congress by the clayton Act, 38 Stat. 730,
amended the Sherman Act and defined the term 'commerce' as used in that Act,
it gave no indication that it questioned or desired this Court to overrule the
decision of the Deer Lodge case and those preceding it. On the contrary Mr.
Webb, who was in charge of the bill in the House of Representatives, stated that
'insurance companies are not reached as the Supreme Court has held that their
contracts or policies are not interstate commerce'. 51 Cong.Rec. 9390.10

62

This Court, throughout the seventy-five years since the decision of Paul v.
Virginia, has adhered to the view that the business of insurance is not interstate
commerce.11 Such has ever since been the practical construction by the other
branches of the Government of the application to insurance of the commerce

clause and the Sherman Act. Long continued practical construction of the
Constitution or a statute is of persuasive force in determining its meaning and
proper application. Pocket Veto Case, 279 U.S. 655, 688, 690, 49 S.Ct. 463,
469, 470, 73 L.Ed. 894, 64 A.L.R. 1434; Federal Trade Commission v. Bunte
Bros., 312 U.S. 349, 351, 352, 61 S.Ct. 580, 581, 582, 85 L.Ed. 881; United
States v. Cooper Corp., 312 U.S. 600, 613, 614, 61 S.Ct. 742, 747, 748, 85
L.Ed. 1071. It is significant that in the fifty years since the enactment of the
Sherman Act the Government has not until now sought to apply it to the
business of insurance,12 and that Congress has continued to regard insurance as
not constituting interstate commerce. Although often asked to do so it has
repeatedly declined to pass legislation regulating the insurance business and to
sponsor constitutional amendments subjecting it to Cognressional control.13
63

The decision now rendered repudiates this long continued and consistent
construction of the commerce clause and the Sherman Act. We do not say that
that is in itself a sufficient ground for declining to join in the Court's decision.
This Court has never committed itself to any rule or policy that it will not 'bow
to the lessons of experience and the force of better reasoning' by overruling a
mistaken precedent. See cases collected in Justice Brandeis's dissenting opinion
in Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 406, 409, 52 S.Ct. 443,
447, 448, 76 L.Ed. 815, notes 14, and in Smith v. Allwright, 321 U.S. 649,
64 S.Ct. 757, note 10; and see Legal Tender Cases, 12 Wall. 457, 553, 554, 20
L.Ed. 287. This is especially the case when the meaning of the Constitution is
at issue and a mistaken construction is one which cannot be corrected by
legislative action.

64

To give blind adherence to a rule or policy that no decision of this Court is to be

overruled would be itself to overrule many decisions of the Court which do not
accept that view. But the rule of stare decisis embodies a wise policy because it
is often more important that a rule of law be settled than that it be settled right.
This is especially so where as here, Congress is not without regulatory power.
Cf. Penn Dairies v. Milk Control Comm., 318 U.S. 261, 271, 275, 63 S.Ct. 617,
621, 623, 87 L.Ed. 748. The question then is not whether an earlier decision
should ever be overruled, but whether a particular decision ought to be. And
before overruling a precedent in any case it is the duty of the Court to make
certain that more harm will not be done in rejecting than in retaining a rule of
even dubious validity. Compare Helvering v. Griffiths, 318 U.S. 371, 400, 404,
63 S.Ct. 636, 651653, 87 L.Ed. 843.

65

From what has been said it seems plain that our decisions that the business of
insurance is not commerce are not unsound in principle, and involve no
inconsistency or lack of harmony with accepted doctrine. They place no field of

activity beyond the control of both the national and state governments as did
Hammer v. Dagenhart, 247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101, 3 A.L.R.
649, Ann.Cas.1918E, 724, overruled three years ago by a unanimous Court in
United States v. Darby, 312 U.S. 100, 117, 657, 61 S.Ct. 451, 458, 85 L.Ed.
609, 132 A.L.R. 1430. On the contrary the ruling that insurance is not
commerce, and is therefore unaffected by the restrictions which the commerce
clause imposes on state legislation, removed the most serious obstacle to
regulation of that business by the states. Through their plenary power over
domestic and foreign corporations which are not engaged in interstate
commerce, the states have developed extensive and effective systems of
regulation of the insurance business, often solving regulatory problems of a
local character with which it would be impractical or difficult for Congress to
deal through the exercise of the commerce power. And in view of the broad
powers of the federal government to regulate matters which, though not
themselves commerce, nevertheless affect interstate commerce, Wickard v.
Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122; Polish National Alliance v.
National Labor Relations Board, supra, there can be no doubt of the power of
Congress if it so desires to regulate many aspects of the insurance business
mentioned in this indictment.
66

But the immediate and only practical effect of the decision now rendered is to
withdraw from the states, in large measure, the regulation of insurance and to
confer it on the national government, which has adopted no legislative policy
and evolved no scheme of regulation with respect to the business of insurance.
Congress having taken no action, the present decision substitutes, for the varied
and detailed state regulation developed over a period of years, the limited aim
and indefinite command of the Sherman Act for the suppression of restraints on
competition in the marketing of goods and services in or affecting interstate
commerce, to be applied by the courts to the insurance business as best they
may.

67

In the years since this Court's pronouncement that insurance is not commerce
came to be regarded as settled constitutional doctrine, vast efforts have gone
into the development of schemes of state regulation and into the organization of
the insurance business in conformity to such regulatory requirements. Vast
amounts of capital have been invested in the business in reliance on the
permanence of the existing system of state regulation. How far that system is
now supplanted is not, and in the nature of things could not well be, explained
in the Court's opinion. The Government admits that statutes of at least five
states will be invalidated by the decision as in conflict with the Sherman Act,
and the argument in this Court reveals serious doubt whether many others may
not also be inconsistent with that Act. The extent to which still other state

statutes will now be invalidated as in conflict with the commerce clause has not
been explored in any detail in the briefs and argument or in the Court's opinion.
68

Certainly there cannot but be serious doubt as to the validity of state taxes
which may now be thought to discriminate against the interstate commerce, cf.
Philadelphia Fire Association v. New York, 119 U.S. 110, 7 S.Ct. 108, 30 L.Ed.
342; or the extent to which conditions may be imposed on the right of insurance
companies to do business within a state; or in general the extent to which the
state may regulate whatever aspects of the business are now for the first time to
be regarded as interstate commerce. While this Court no longer adheres to the
inflexible rule that a state cannot in some measure regulate interstate
commerce, the application of the test presently applied requires 'a consideration
of all the relevant facts and circumstances' in order to determine whether the
matter is an appropriate one for local regulation and whether the regulation
does not unduly burden interstate commerce, Parker v. Brown, 317 U.S. 341,
362, 63 S.Ct. 307, 319, 87 L.Ed. 315a determination which can only be made
upon a case-to-case basis. Only time and costly experience can give the
answers.

69

Congress made the choice against so drastic a change when in 1906 it rejected
the proposals to assume national control over the insurance business. The report
of the House Committee on the Judiciary pointed out that 'all of the evils and
wrongs complained of are subject to the exclusive regulation of State legislative
power' and added: 'assuming that Congress declares that insurance is commerce
and the Supreme Court holds the legislation constitutional, how much could
Congress regulate, and what effect would such legislation have? It would
disturb the very substructure of government by precipitating a violent conflict
between the police power of the States and the power of Cognress to regulate
interstate commerce. To uphold the Federal power would be to extinguish the
police power of the State by the legislation of Congress. In other words,
Congress would admit corporations into the respective States and have the
entire regulating power.' H.R.Rep. No. 2491, 59th Cong., 1st Sess., 13, 15-16.
See id. 18.

70

Had Congress chosen to legislate for such parts of the insurance business as
could be found to affect interstate commerce, whether by making the Sherman
Act applicable to them or by regulation in some other form, it could have
resolved many of these questions of conflict between federal and state
regulation. But this Court can decide only the questions before it in particular
cases. Its action in now overturning the precedents of seventy-five years
governing a business of such volume and of such wide ramifications, cannot fail
to be the occasion for loosing a flood of litigation and of legislation, state and

national, in order to establish a new boundary between state and national

power, raising questions which cannot be answered for years to come, during
which a great business and the regulatory officers of every state must be
harassed by all the doubts and difficulties inseparable from a realignment of the
distribution of power in our federal system. These considerations might well
stay a reversal of long established doctrine which promises so little of
advantage and so much of harm. For me these considerations are controlling.
71

The judgment should be affirmed.

72

Mr. Justice FRANKFURTER.

73

I join in the opinion of the CHIEF JUSTICE.

74

The relations of the insurance business to national commerce and finance, I

have no doubt, afford constitutional authority for appropriate regulation by
Congress of the business of insurance, certainly not to a less extent than
Congressional regulation touching agriculture. See, e.g., Smith v. Kansas City
Title & Trust Co., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577; Wickard v.
Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122. But the opinion of the CHIEF
JUSTICE leaves me equally without doubt that by the enactment of the
Sherman Act in 1890, 15 U.S.C.A. 17, 15 note, Congress did not mean to
disregard the then accepted conception of the constitutional basis for the
regulation of the insurance business. And the evidence is overwhelming that
the inapplicability of the Sherman Act, in its contemporaneous setting, to
insurance transactions such as those charged by this indictment has been
confirmed and not modified by Congressional attitude and action in the
intervening fifty years. There is no Congressional warrant therefore for
bringing about the far-reaching dislocations which the opinions of the CHIEF
JUSTICE and Mr. Justice JACKSON adumbrate.

75

Mr. Justice JACKSON, dissenting in part.

I.
76

The historical development of public regulation of insurance underwriting in

this country has created a dilemma which confronts this Court today. It
demonstrates that 'The life of the law has not been logic: it has been experience.'

77

For one hundred fifty years Congress never has undertaken to regulate the
business of insurance. Therefore to give the public any protection against

abuses to which that business is peculiarly susceptible the states have had to
regulate it. Since 1851 the several states, spurred by necessity and with
acquiescence of every branch of the Federal Government, have been building
up systems of regulation to discharge this duty toward their inhabitants.1
78

There never was doubt of the right of a state to regulate the business of its
domestic companies done within the home state. The foreign corporation was
the problem. Such insurance interests resisted state regulation and brought a
series of cases to this Court. The companies sought to disable the states from
regulating them by arguing that insurance business is interstate commerce, an
argument almost identical with that now made by the Government.2 The
foreign companies thus sought to vest insurance control exclusively in
Congress and to deprive every state of power to exclude them, to regulate them,
or to tax them for the privilege of doing business.

79

The practical and ultimate choice that faced this Court was to say either that
insurance was subject to state regulation or that it was subject to no existing
regulation at all. The Court consistently sustained the right of the states to
represent the public interest in this enterprise. It did so, wisely or unwisely, by
resort to the doctrine that insurance is not commerce and hence is unaffected by
the grant of power to Congress to regulate commerce among the several states.
Each state thus was left free to exclude foreign insurance companies altogether
or to admit them to do business on such conditions as it saw fit to impose. The
whole structure of insurance regulation and taxation as it exists today has been
built upon this assumption.3

80

The doctrine that insurance business is not commerce always has been criticized
as unrealistic, illogical, and inconsistent with other holdings of the Court. I am
unable to make any satisfactory distinction between insurance business as now
conducted and other transactions that are held to constitute interstate
commerce.4 Were we considering the question for the first time and writing
upon a clean slate, I would have no misgivings about holding that insurance
business is commerce and where conducted across state lines is interstate
commerce and therefore that congressional power to regulate prevails over that
of the states. I have little doubt that if the present trend continues federal
regulation eventually will supersede that of the states.

81

The question therefore for me settles down to this: What role ought the
judiciary to play in reversing the trend of history and setting the nation's feet on
a new path of policy? To answer this I would consider what choices we have in
the matter.

II.
82

The Government claims, and we must approve or reject the claim, that the
antitrust laws constitute an exercise of congressional power which reaches the
insurance business. That might be true on either of two different bases. The
practical as well as the theoretical difference is substantial, as this case will
show.

83

1. If an activity is held to be interstate commerce, Congress has paramount

regulatory power. If it acts at all in relation to such a subject, it often has been
held that it has 'occupied the field' to the exclusion of the states, that the federal
legislation defines the full measure of regulation and outside of it the activity is
to be free.5 This Court now is not fully agreed as to the effects of the
Commerce Clause on state power,6 but at least the Court always has considered
that if an activity is held to be interstate in character a state may not exclude,
burden, or obstruct it,7 nor impose a license tax on the privilege of carrying it
on within the state.8 The holding of the Court in this case brings insurance
within this line of decisions restricting state power.

84

2. Although an activity is held not to be commerce or not to be interstate in

character, Congress nevertheless may reach it to prohibit specific acivities in its
conduct that substantially burden or restrain interstate commerce. Wickard v.
Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122. When this power is exercised
by Congress, it impairs state regulation only in so far as it actually conflicts
with the federal regulation. Terminal Railroad Association v. Brotherhood of
Railroad Trainmen, 318 U.S. 1, 63 S.Ct. 420, 87 L.Ed. 571. This congressional
power to reach activities that are not interstate commerce interferes with state
power only in a milder, narrower, and more specific way.

85

Instead of overruling our repeated decisions that insurance is not commerce, the
Court could apply to this case the principle that even if it is not commerce the
antitrust laws prohibit its manipulation to restrain interstate commerce, just as
we hold that the National Labor Relations Act, 29 U.S.C.A. 151 et seq.,
prohibits insurance companies, even if not in commerce, from engaging in
unfair labor practices which affect commerce. Polish National Alliance v.
N.L.R.B., 322 U.S. 643, 64 S.Ct. 1196. This would require the Government to
show that any acts it sought to punish affect something more than insurance
and substantially affect interstate transportation or interstate commerce in some
commodity. Whatever problems of reconciliation between state and federal
authority this would presentand it would not avoid them allit would leave
the basis of state regulation unimpaired.

86

The principles of decision that I would apply to this case are neither novel nor
complicated and may be shortly put:

87

1. As a matter of fact, modern insurance business, as usually conducted, is

commerce; and where it is conducted across state lines, it is in fact interstate
commerce.

88

2. In contemplation of law, however, insurance has acquired an established

doctrinal status not based on present-day facts. For constitutional purposes a
fiction has been established, and long acted upon by the Court, the states, and
the Congress, that insurance is not commerce.

89

3. So long as Congress acquiesces, this Court should adhere to this carefully

considered and frequently reiterated rule which sustains the traditional
regulation and taxation of insurance companies by the states.

90

4. Any enactment by Congress either of partial or of comprehensive regulations

of the insurance business whould come to us with the most forceful
presumption of constitutional validity. The fiction that insurance is not
commerce could not be sustained against such a presumption, for resort to the
facts would support the presumption in favor of the congressional action. The
faction therefore must yield to congressional action and continues only at the
sufferance of Congress.

91

5. Congress also may, without exerting its full regulatory powers over the
subject, and without challenging the basis or supplanting the details of state
regulation, enact prohibitions of any acts in pursuit of the insurance business
which substantially affect or unduly burden or restrain interstate commerce.

92

6. The antitrust laws should be construed to reach the business of insurance and
those who are engaged in it only under the latter congressional power. This
does not require a change in the doctrine that insurance is not commerce. The
statute as thus construed would authorize prosecution of all combinations in the
course of insurance business to commit acts not required or authorized by state
law, such as intimidation, disparagement, or coercion, if they unreasonably
restrain interstate commerce in commodities or interstate transportation.9 It
would leave state regulation intact.

III.
93

The majority of the sitting Justices insist that we follow the more drastic

course. Abstract logic may support them, but the common sense and wisdom of
the situation seem opposed. It may be said that practical consequences are no
concern of a court, that it should confine itself to legal theory. Of course, in
cases where a constitutional provision or a congressional statute is clear and
mandatory, its wisdom is not for us. But the Court now is not following, it is
overruling, an unequivocal line of authority reaching over many years. We are
not sustaining an act of Congress against attack on its constitutionality, we are
making unprecedented use of the Act to strike down the constitutional basis of
state regulation. I think we not only are free, but are duty bound, to consider
practical consequences of such a revision of constitutional theory. This Court
only recently recognized that certain former decisions as to the dividing line
between state and federal power were illogical and theoretically wrong, but at
the same time it announced that it would adhere to them because both
governments had accommodated the structure of their laws to the error. Davis
v. Department of Labor & Industries, 317 U.S. 249, 255, 63 S.Ct. 225, 228, 87
L.Ed. 246. It seemed a commonsense course to follow then, and I think similar
considerations should restrain us from following a contrary and destructive
course now.
94

The states began nearly a century ago to regulate insurance, and state
regulation, while no doubt of uneven quality, today is a successful going
concern. Several of the states, where the greatest volume of business is
transacted, have rigorous and enlightened legislation, with enforcement and
supervision in the hands of experienced and competent officials. Such state
departments, through trial and error, have accumulated that body of institutional
experience and wisdom so indispensable to good administration. The Court's
decision at very least will require an extensive overhauling of state legislation
relating to taxation and supervision. The whole legal basis will have to be
reconsidered. What will be irretrievably lost and what may be salvaged no one
now can say, and it will take a generation of litigation to determine. Certainly
the states lose very important controls and very considerable revenues.10

95

The recklessness of such a course is emphasized when we consider that

Congress has not one line of legislation deliberately designed to take over
federal responsibility for this important and complicated enterprise.11 There is
no federal department or personnel with national experience in the subject on
which Congress can call for counsel in framing regulatory legislation. A poorer
time to thrust upon Congress the necessity for framing a plan for
nationalization of insurance control would be hard to find.

96

Moreover, we have not a hint from Congress that it concurs in the plan to
federalize responsibility for insurance supervision. Indeed, every indication is

to the contrary.12 It was urged to do so by one President,13 and by the insurance

companies.14 The decisions of this Court confirming state power over insurance
have been paralleled by a history of congressional refusal to extend federal
authority into the field,15 although no decision ever has explicitly denied the
power to do so.
97

The orderly way to nationalize insurance supervision, if it be desirable, is not

by court decision but through legislation. Judicial decision operates on the
states and the industry retroactively. We cannot anticipate, and more than likely
we could not agree, what consequences upon tax liabilities, refunds, liabilities
under state law to states or to individuals, and even criminal liabilities will
follow this decision. Such practical considerations years ago deterred the Court
from changing its doctrine as to insurance.16 Congress, on the other hand, if it
thinks the time has come to take insurance regulation into the federal system,
may formulate and announce the whole scope and effect of its action in
advance, fix a future effective date, and avoid all the confusion, surprise, and
injustice which will be caused by the action of the Court.17

98

A judgment as to when the evil of a decisional error exceeds the evil of an

innovation must be based on very practical and in part upon policy
considerations. When, as in this problem, such practical and political judgments
can be made by the political branches of the Government, it is the part of
wisdom and self-restraint and good government for courts to leave the initiative
to Congress.

99

Moreover, this is the method of responsible democratic government. To force

the hand of Congress is no more the proper function of the judiciary than to tie
the hands of Congress. To use my office, at a time like this, and with so little
justification in necessity, to dislocate the functions and revenues of the states18
and to catapult Congress into immediate and undivided responsibility for
supervision of the nation's insurance businesses is more than I can reconcile
with my view of the function of this Court in our society.

The 'allied lines' of insurance handled by appellees are described in the

indictment as 'inland navigation and transportation, inland marine, sprinkler
leakage, explosion, windstorm and tornado, extended coverage, use and
occupancy, and riot and civil commotion insurance.'

The pertinent provisions of Sections 1 and 2 of the Act of July 2, 1890, 26 Stat.
209, as amended, 15 U.S.C. 1 and 2, 15 U.S.C.A. 1, 2, commonly known

as the Sherman Act, are as follows:

'Sec. 1. Every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with
foreign nations, is hereby declared to be illegal: * * * Every person who shall
make any contract or engage in any combination or conspiracy declared by
sections 1-7 of this title to be illegal shall be deemed guilty of a misdemeanor. *
**
'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, * * *.'
3

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

See, e.g., Fashion Originators' Guild v. Federal Trade Comm'n, 312 U.S. 457,
465468, 61 S.Ct. 703, 706708, 85 L.Ed. 949; United States v. SoconyVacuum Oil Co., 310 U.S. 150, 210 224, 60 S.Ct. 811, 838845, 84 L.Ed.
1129; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 394, 60 S.Ct.
907, 913, 84 L.Ed. 1263; United States v. Trenton Potteries Co., 273 U.S. 392,
395 402, 47 S.Ct. 377, 378381, 71 L.Ed. 700, 50 A.L.R. 989; United States
v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.S., 325; Swift
& Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518.

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

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

See 56 Stat. 271 amending 34 Stat. 1246, 18 U.S.C. 682, 18 U.S.C.A. 682;
United States v. Borden Company, 308 U.S. 188, 192, 193, 60 S.Ct. 182, 185,
186, 84 L.Ed. 181. Appellees contend that the District Court read both counts

of the indictment as alleging that the trade or commerce sought to be restrained

and monopolized was the business of selling fire insurance, that the Court
rightly decided that such business was not commerce, and that therefore its
judgment should be affirmed. The Government denies that the Court construed
the indictment so narrowly. It insists that the first count of the indictment
charges a violation of 1 of the Act regardless of whether the insurance
business itself be commerce, since that account charges that the practices of the
fire insurance companies constituted an unlawful restraint of interstate trade or
commerce in such fields as transportation and industry which must purchase
fire insurance. Cf. Polish National Alliance v. National Labor Relations Board,
322 U.S. 643, 64 S.Ct. 1196, In the view we take of the case it is unnecessary
to pass upon this question. We consider the case on the assumption that
appellees' contention on this point is correct.
8

See Gibbons v. Ogden, 9 Wheat 1, 6 L.Ed. 23; also, Hamilton and Adair, The
Power to Govern (N.Y.1937), pp. 5363.

Alexander Hamilton, in 1791, stating his opinion on the constitutionality of the

Bank of the United States, declared that it would 'admit of little if any question'
that the federal power to regulate foreign commerce included 'the regulation of
policies of insurance.' 3 Works of Alexander Hamilton (Fed. Ed., N.Y.1904)
pp. 445, 469470. Speaking of the need of a federal power to regulate
'commerce', Hamilton had earlier said, 'It is indeed, evident, on the most
superficial view, that there is no object, either as it respects the interests of trade
or finance, that more strongly demands a federal superintendence.' Federalist
No. XXII, The Federalist, Rev.Ed., N.Y.1901, 110.

10

According to figures gathered by the National Resources Committee, each of

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

11

U.S. Department of Commerce, Statistical Abstract of the United States, 1942,

pp. 335342, 694.

12

Ibid., pp. 195, 335342.

13

Sixteenth Census of the United States1940; Part 1: United States Summary,

Vol. III, The Labor Force, pp. 180, 181.

14

'We have shown that the business of insurance has very definite characteristics,

with a reach of influence and consequence beyond and different from that of the
ordinary businesses of the commercial world, to pursue which a greater liberty
may be asserted. * * * Insurance * * * is practically a necessity to business
activity and enterprise. It is, therefore, essentially different from ordinary
commercial transactions, and, as we have seen, according to the sense of the
world from the earliest times,certainly the sense of the modern world,is of
the greatest public concern.' German Alliance Insurance Company v.
Superintendent, etc., of Kansas, 233 U.S. 389, 414, 415, 34 S.Ct. 612, 620, 58
L.Ed. 1011, L.R.A.1915C, 1189.
15

The five largest legal reserve life insurance companies, owning total assets of
approximately $15,000,000,000, have their home offices in or near New York
City. Best's Life Reports, 1939, as summarized in Monograph 28 printed for
the use of the Temporary National Economic Committee, Appendix A (U.S.
Government Printing Office 1940). Each of these companies is licensed in
every state of the Union except that two of them are not licensed in Texas. Life
Insurance Year Book, 1942-3.
The five largest stock fire and marine insurance companies, owning total assets
of approximately $550,000,000, are similarly located. Best's 1943 Digest of
Insurance Stocks, xxxii. And each does business in every state of the union.
Ibid.

16

The amounts given as premiums collected and losses paid during the period
19311941 are for all stock fire insurance companies operating in the six
states involved. The companies which were parties to the alleged conspiracies
probably collected and paid about 90% of these amounts since they controlled
that percentage of the total business.

17

'The defect of the argument lies in the character of their business. Issuing a
policy of insurance is not a transaction of commerce. The policies are simple
contracts of indemnity against loss by fire, entered into between the
corporations and the assured, for a consideration paid by the latter. These
contracts are not articles of commerce in any proper meaning of the word. They
are not subjects of trade and barter offered in the market as something having
an existence and value independent of the parties to them. They are not
commodities to be shipped or forwarded from one State to another, and then put
up for sale. They are like other personal contracts between parties which are
completed by their signature and the transfer of the consideration. Such
contracts are not inter-state transactions, though the parties may be domiciled in
different States. The policies do not take effect are not executed contracts
until delivered by the agent in Virginia. They are, then, local transactions, and
are governed by the local law.' 8 Wall. 168, 183, 19 L.Ed. 357.

18

Other cases which have repeated or relied upon the Paul generalization are
Ducat v. Chicago, 10 Wall. 410, 415, 19 L.Ed. 972; Liverpool Insurance
Company v. Massachusetts, 10 Wall. 566, 573, 19 L.Ed. 1029; Philadelphia
Fire Association v. New York, 119 U.S. 110, 118, 7 S.Ct. 108, 112, 30 L.Ed.
342; Noble v. Mitchell, 164 U.S. 367, 370, 17 S.Ct. 110, 111, 41 L.Ed. 472;
New York Life Insurance Company v. Cravens, 178 U.S. 389, 401, 20 S.Ct.
962, 967, 44 L.Ed. 1116; Nutting v. Massachusetts, 183 U.S. 553, 22 S.Ct. 238,
46 L.Ed. 324; Northwestern Mutual Life Insurance Company v. Wisconsin, 247
U.S. 132, 38 S.Ct. 444, 62 L.Ed. 1025; Bothwell v. Buckbee-Mears Company,
275 U.S. 274, 276, 277, 48 S.Ct. 124, 125, 72 L.Ed. 277; and Colgate v.
Harvey, 296 U.S. 404, 432, 56 S.Ct. 252, 260, 80 L.Ed. 299, 102 A.L.R. 54.
For a collection and analysis of the cases see Gavit, The Commerce Clause of
the United States Constitution (Bloomington, Indiana 1932), pp. 134139.

19

For statistics illustrative of the tremendous expansion of the fire and marine
insurance business between 18601941, see New York Insurance Report for
1942, Vol. II, Table A. In 1860 fire and marine insurance companies reporting
to the New York Superintendent of Insurance listed assets of $44,500,000 and
premiums written of $13,500,000. In 1941 they listed assets of almost
$3,000,000,000, and premiums written of $1,150,000,000. Ibid.

20

See generally Insurance Blue Book (Centennial Issue 1876 77), c. VI, 'Fire
Insurance, 18601869'; Patterson, The Insurance Commissioner in the United
States (Camb. 1927), pp. 519537: Nehemkis, Paul v. Virginia, The Need for
Re-examination, 27 Georgetown L.J. 519 (1939).

21

Ibid.

22

See, e.g., Wickard v. Filburn, 317 U.S. 111, 121, 122, 63 S.Ct. 82, 87, 88, 87
L.Ed. 122; Binderup v. Pathe Exchange, 263 U.S. 291, 311, 44 S.Ct. 96, 100,
68 L.Ed. 308; Stafford v. Wallace, 258 U.S. 495, 525528, 42 S.Ct. 397, 405,
406, 66 L.Ed. 735, 23 A.L.R. 229; Bacon v. Illinois, 227 U.S. 504, 516, 517, 33
S.Ct. 299, 303, 57 L.Ed. 615; Swift & Co. v. United States, 196 U.S. 375, 400,
25 S.Ct. 276, 281, 49 L.Ed. 518.

23

That the decisions of this Court upholding state insurance laws do not
necessarily constitute a denial of federal power to regulate insurance has, upon
occasion, been recognized both by insurance executives and lawyers. See, for
example, An Address on the Regulation of Insurance By Congress, by John F.
Dryden, President, Prudential Insurance Company of America, delivered
November 22, 1904, pp. 1213: 'The decision (Paul v. Virginia), and those
that have followed, did not relate to the real point involved in a consideration of
the regulation of the insurance business as interstate commerce by the Federal

government. * * * It is the opinion of qualified authorities who have given most

careful consideration to this aspect of the subject * * * that under the implied
and resulting powers of the Constitution the Supreme Court would not withhold
the verdict of constitutionality from an act of Congress declaring interstate
insurance to be interstate commerce.' See, similarly, Insurance is Commerce, by
George F. Seward, President, The Fidelity and Casualty Company of New York
(1910) pp. 1516; S.S. Huebner, Federal Supervision and Regulation of
Insurance, Annals, Amer. Acad. of Pol. and Soc. Science, Vol. xxvi, No. 3
(1905) 681707. But see, e.g., contra: Vance, Federal Control of Insurance
Corporations. 17 Green Bag (1905) 83, 89; Randolph, Opinion on the Proposal
for Federal Supervision of Insurance (N.Y.1905) pp. 1220.
The report of the Committee on Insurance Law of the American Bar
Association, in 1906, discussing the constitutionality of federal supervision of
insurance, stated flatly that Paul v. Virginia and the cases which follow it 'do
not bar Congressional action.' Reports of American Bar Association, Vol. xxix,
Part 1 (1906), pp. 538, 552567.
24

See Note 17, supra.

25

See for illustration Gibbons v. Ogden, 9 Wheat. 1, 189, 190, 229, 230, 6 L.Ed.
23; Pensacola Telegraph Company v. Western Union Telegraph Company, 96
U.S. 1, 24 L.Ed. 708; Lottery Case (Champion v. Ames), 188 U.S. 321, 23
S.Ct. 321, 47 L.Ed. 492; Jordan v. K. Tashiro, 278 U.S. 123, 127, 128, 49 S.Ct.
47, 48, 49, 73 L.Ed. 214; Electric Bond & Share Co. v. Securities & Exchange
Comm., 303 U.S. 419, 432, 433, 58 S.Ct. 678, 682, 683, 82 L.Ed. 936, 115
A.L.R. 105; and American Medical Association v. United States, 317 U.S. 519,
63 S.Ct. 326, 87 L.Ed. 434.

26

Cf. Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 317, 63 S.Ct. 602, 605, 87
L.Ed. 777. 'The contracts of insurance may be said to be interdependent. They
cannot be regarded singly or isolatedly, and the effect of their relation is to
create a fund of assurance and credit, the companies becoming the depositories
of the money of the insured, possessing great power thereby, and charged with
great responsibility.' German Alliance Insurance Company v. Superintendent,
etc., of Kansas, 233 U.S. 389, 414, 34 S.Ct. 612, 620, 58 L.Ed. 1011,
L.R.A.1915C, 1189. And see Furst v. Brewster, 282 U.S. 493, 497, 498, 51
S.Ct. 295, 296, 297, 75 L.Ed. 478.

27

Appraising the Swift case Mr. Chief Justice Taft had this to say: 'That case was
a milestone in the interpretation of the commerce clause of the Constitution. It
recognized the great changes and development in the business of this vast
country and drew again the dividing line between interstate and intrastate

commerce where the Constitution intended it to be. It refused to permit local

incidents of a great interstate movement, which taken alone were intrastate, to
characterize the movement as such. (Italics supplied.) The Swift case merely
fitted the commerce clause to the real and practical essence of modern business
growth.' Board of Trade of City of Chicago v. Olsen, 262 U.S. 1, 35, 43 S.Ct.
470, 477, 67 L.Ed. 839.
Compare Indiana Farmers' Guide Publishing Co. v. Prairie Farmer Publishing
Co., 293 U.S. 268, 274277, 55 S.Ct. 182, 183 185, 79 L.Ed. 356; Stafford v.
Wallace, 258 U.S. 495, 518, 519, 42 S.Ct. 397, 402, 403, 66 L.Ed. 735, 23
A.L.R. 229.
28

New York Life Insurance Company v. Deer Lodge County, 231 U.S. 495, 509,
34 S.Ct. 167, 172, 58 L.Ed. 332.

29

See, e.g., Crutcher v. Kentucky, 141 U.S. 47, 5961, 11 S.Ct. 851, 854, 855,
35 L.Ed. 649; Atlantic Refining Co. v. Virginia, 302 U.S. 22, 26, 58 S.Ct. 75,
77, 82 L.Ed. 24; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33,
60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876.

30

See Gibbons v. Ogden, 9 Wheat. 1, 200, 203210, 6 L.Ed. 23; Willson v.

Black-bird Creek Marsh Co., 2 Pet. 245, 250252, 7 L.Ed. 412; License
Cases, 5 How. 504, 578, 586, 12 L.Ed. 256, Opinion of Mr. Chief Justice
Taney; Cooley v. Board of Wardens, 12 How. 299, 318321, 13 L.Ed. 996;
Kelly v. Washington, 302 U.S. 1, 9, 10, 58 S.Ct. 87, 91, 92, 82 L.Ed. 3. Cf.
Sturges v. Crowninshield, 4 Wheat. 122, 192196, 4 L.Ed. 529; Houston v.
Moore, 5 Wheat. 1, 4850, 5 L.Ed. 19, Opinion of Mr. Justice Story.

31

Parker v. Brown, 317 U.S. 341, 362, 363, 63 S.Ct. 307, 319, 320, 87 L.Ed. 315,
cf. People of State of California v. Thompson, 313 U.S. 109, 112116, 61
S.Ct. 930, 931933, 85 L.Ed. 1219; South Carolina State Highway
Department v. Barnwell Brothers, Inc., 303 U.S. 177, 184192, 625, 58 S.Ct.
510, 513518, 83 L.Ed. 734, and cases cited therein in footnote 5; Hall v.
Geiger-Jones Company, 242 U.S. 539, 558, 559, 37 S.Ct. 217, 223, 224, 61
L.Ed. 480, L.R.A.1917F, 514, Ann.Cas.1917C, 643; Bowman v. Chicago &
Northwestern R. Co., 125 U.S. 465, 482, 483, 8 S.Ct. 689, 696, 697, 1062, 31
L.Ed. 700. That different members of the Court applying this test to a particular
state statute may reach opposite conclusions as to its validity does not argue
against the correctness of the test itself. Such differences in judgment are
inevitable where solution of a Constitutional problem must depend upon
considered evaluation of competing Constitutional objectives. See, e.g.,
McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 48, 59, 60 S.Ct.
388, 393, 399, 84 L.Ed. 565, 128 A.L.R. 876; McCarroll v. Dixie Greyhound

Lines, Inc., 309 U.S. 176, 183, 60 S.Ct. 504, 507, 84 L.Ed. 683; Duckworth v.
Arkansas, 314 U.S. 390, 397, 62 S.Ct. 311, 314, 86 L.Ed. 294, 138 A.L.R.
1144; cf. Gwin, etc., Inc., v. Henneford, 305 U.S. 434, 442, 59 S.Ct. 325, 329,
83 L.Ed. 272.
32

See, e.g., Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996; New York
Life insurance Company v. Deer Lodge County, 231 U.S. 495, 34 S.Ct. 167, 58
L.Ed. 332; cf. Bowman v. Chicago & Northwestern R. Co., 125 U.S. 465, 482
483, 8 S.Ct. 689, 696, 697, 1062, 31 L.Ed. 700.

33

Lottery Case (Champion v. Ames), 188 U.S. 321, 363, 23 S.Ct. 321, 330, 47
L.Ed. 492; cf. A. B. Kirschbaum Co. v. Walling, 316 U.S. 517, 520, 62 S.Ct.
1116, 1118, 86 L.Ed. 1638. This particular difficulty was recognized by the
authors of the Federalist Papers: 'All new laws, though penned with the greatest
technical skill, and passed on the fullest and most mature deliberation, are
considered as more or less obscure and equivocal, until their meaning be
liquidated and ascertained by a series of particular discussions and
adjudications * * *. Here, then, are three sources of vague and incorrect
definitions: indistinctness of the object, imperfection of the organ of
conception, inadequateness of the vehicle of ideas. Any one of these must
produce a certain degree of obscurity. The Convention, in delineating the
boundary between the federal and State jurisdictions, must have experienced
the full effect of them all.' Federalist No. XXXVI, The Federalist, Rev.Ed.,
N.Y.1901, pp. 193 194.

34

'Commerce is intercourseone of its most ordinary ingredients is traffic.'

Brown v. Maryland, 12 Wheat. 419, 446, 6 L.Ed. 678. 'And although
commerce includes traffic in this narrower sense, for more than a century it has
been judicially recognized that in a broad sense it embraces every phase of
commercial and business activity and intercourse.' Jordan v. K. Tashiro, 278
U.S. 123, 127, 128, 49 S.Ct. 47, 48, 73 L.Ed. 214.
Commerce 'comprehends intercourse for the purposes of trade in any and all its
forms, including the transportation, purchase, sale, and exchange of
commodities * * *.' Welton v. Missouri, 91 U.S. 275, 280, 23 L.Ed. 347. And
'intercourse or communication between persons in different states, by means of
correspondence through the mails, is commerce among the states within the
meaning of the Constitution, especially where * * * such intercourse and
communication really relate to matters of regular, continuous business and to
the making of contracts and the transportation of books, papers, etc.,
appertaining to such business.' International Textbook Company v. Pigg, 217
U.S. 91, 107, 30s.Ct. 481, 485, 54 L.Ed. 678, 27 L.R.A.,N.S., 493, 18
Ann.Cas. 1103.

35

See Pensacola Telegraph Company v. Western Union Telegraph Company, 96

U.S. 1, 9, 24 L.Ed. 708.
'A government ought to contain in itself every power requisite to the full
accomplishment of the objects committed to its care, and to the complete
execution of the trusts for which it is responsible, free from every other control,
but a regard to the public good and to the sense of the people.' Federalist No.
XXX, The Federalist, supra, 154.

36

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

37

Compare Federalist No. XXIII, The Federalist, supra, 121: 'Shall the Union be
constituted the guardian of the common safety? Are fleets and armies, and
revenues, necessary to this purpose? The government of the Union must be
empowered to pass all laws, and to make all regulations which have relation to
them. The same must be the case in respect to commerce, and to every other
matter to which its jurisdiction is permitted to extend. * * * Not to confer in
each case a degree of power commensurate to the end, would be to violate the
most obvious rules of prudence and propriety, and improvidently to trust the
great interests of the nation to hands which are disabled from managing them
with vigor and success.'
See Note (1943), 32 Georgetown Law Journal 66.

38

The powers conferred by the Commerce Clause 'are not confined to the
instrumentalities of commerce * * * known or in use when the Constitution was
adopted, but they keep pace with the progress of the country, and adapt
themselves to the new developments of time and circumstances. * * * They
were intended for the government of the business to which they relate, at all
times and under all circumstances.' Pensacola Telegraph Company v. Western
Union Telegraph Company, 96 U.S. 1, 9, 24 L.Ed. 708. Compare Federalist
No. XLIII, The Federalist, supra, 248.

39

A historian of the Wheel, one of the strongest of the farmers' organizations in

the '80's, had this to say about its origin: 'The question has often been asked,
what gave rise to the Wheel? This question is as easily answered as asked,
Monopoly! * * * Monopoly aspires to make the people its servants, politically,
financially and socially, and demands that we offer on its golden altar all that
we are and have, souls, bodies, lives, liberty, and common country,
unreservedly and without complaint.' Morgan, History of the Wheel and
Alliance (Fort Scott, Kan. 1889), p. 56. Compare Slaughter-House Cases, 1873,
16 Wall. 36, 21 L.Ed. 394, Dissenting opinions of Justices Field and Bradley,
16 Wall. pp. 83, 101110, 111, 119121.

40

See Apex Hosiety Co. v. Leader, 310 U.S. 469, 491493, 497, 498, 60 S.Ct.
982, 990992, 994, 995, 84 L.Ed. 1311, 128 A.L.R. 1044; Standard Oil
Company v. United States, 221 U.S. 1, 58, 31 S.Ct. 502, 515, 55 L.Ed. 619, 34
L.R.A., N.S., 834, Ann.Cas.1912D, 734; United States v. Trans-Missouri
Freight Association, 166 U.S. 290, 322325, 17 S.Ct. 540, 551553, 41
L.Ed. 1007. See also Paramount Famous Lasky Corporation v. United States,
282 U.S. 30, 42, 43, 51 S.Ct. 42, 44, 45, 75 L.Ed. 145.
Nor was the opposition to trusts limited to the monopolization of 'goods and
services.' At the instance of Senator Ingalls of Kansas, an amendment was
added to the Sherman bill designed to tax out of existence the business of
dealing in futures contracts. 21 Cong.Rec. 2613. The Ingalls amendment was
adopted by the Senate without a record vote. Id. Subsequently the Sherman bill,
as amended, was redrafted by the Senate Judiciary Committee which used
substantially the same broad and sweeping language which Sections 1 and 2 of
the Act contain today. With that language the Sherman bill had the support of
Senator Ingalls and other proponents of the Ingalls amendment. 21 Cong.Rec.
3145, 3153. And see United States v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57
L.Ed. 333, 44 L.R.A.,N.S., 325; Peto v. Howell, 7 Cir., 101 F.2d 353; cf. Board
of Trade of City of Chicago v. Olsen, 262 U.S. 1, 43 S.Ct. 470, 67 L.Ed. 839;
Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229.
See, generally, Ashby, The Riddle of the Sphinx (Des Moines 1890); Morgan,
History of the Wheel and Alliance (Fort Scott, Kan. 1889); Buck, The Granger
Movement (Camb. 1913); Cloud, Monopolies and the People (Davenport, Iowa
1873); Weaver, A Call to Action (Des Moines 1892); Hicks, The Populist
Revolt (Minneapolis 1931).

41

Representative of anti-trust platforms, resolutions, etc., of contemporary

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

42

The platforms of both the Republican and the Democratic parties in 1888 stated
unqualified opposition to monopolies and trusts. Brandon, Platforms of the

Two Great Political Parties 1856 1928. The recorded vote in the House on the
final conference report on the Sherman Act shows 242 ayes, no nays, and 85
not voting. 21 Cong.Rec. 6314.
43

Four of these statutes were enacted before 1890. L.N.H.1885, ch. 93, p. 289;
L.Ohio 1885, No. 284, p. 231; L.Mich.1887, No. 285, p. 384; L.Kan.1889, ch.
257, p. 389, and L.Kan.1897, ch. 265, p. 481; L.Ga.189091, No. 745, p. 206;
L.Maine 1893, ch. 285, p. 339; L.Mo.1895, p. 237, Mo.R.S.A. 8301 et seq.;
L.Iowa 1896, ch. 22, p. 31; L.Ala.189697, No. 634, p. 1428; L.Neb.1897, ch.
79, p. 347; L.Neb.1897, ch. 81, p. 354; L.Neb.1913, ch. 154, pp. 393, 419;
L.Wis.1897, ch. 356, p. 908; Acts Va. 189798, ch. 644, p. 683; Acts
S.C.1902, No. 574, p. 1057; L.S.D.1903, ch. 158, p. 183; G.L.Tex.1903, ch. 94,
p. 119 Vernon's Ann.Civ.St. 7426 et seq.; Ark. Acts 1905, No. 1, p. 1, as
amended by Ark. Acts 1907, No. 184, p. 430; P.L.N.C.1905, ch. 424, p. 429,
and P.L.N.C.1915, ch. 166, p. 243; Acts Tenn.1905, ch. 479, p. 1019;
Miss.Code 1906, 5002, adopted L.Miss.1906, ch. 101, p. 78; Gen.L.Ore.1909,
ch. 230, pp. 388, 399; Sess.L.Wash.1911, ch. 49, pp. 161, 195, and
Sess.L.Wash.1915, ch. 97, p. 278; L.Ariz.1912, ch. 73, p. 354; Acts La.1912,
No. 224, p. 509.

44

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

45

We have been pointed to only one reference made to the business of insurance
in the Congressional discussions preceding passage of the Sherman Act, and
that is a statement of Senator Turpie which flatly challenged the reasoning of
this Court in holding that insurance was not commerce, and further predicted
that in the future the Commerce Clause would not be given such a limited
construction:
'The Senator from Missouri (Mr. Vest) spoke the other day about the difficulty
of defining the word 'commerce,' especially as contained in the phrase
'interstate commerce.' I recollect one judicial decision upon this subject very
definitely. The Supreme Court has decided that insurance is not commerce, and
I suppose by following the circle of negations long enough and excluding all
the things not commerce we should come at last to the residuum, which must
be commerce or interstate commerce, because it can be nothing else. A fortiori,

judging from this principle, I should myself have decided that transportation is
not commerce nor interstate commerce either. * * *
'I feel inclined to make the prediction, as one of the things to come in this vast
domain, scarcely touched, of cases arising under the Constitution and laws of
Congress, that the whole mass of merchantable paper known as negotiable by
the law merchant, made at one place, negotiable at another, payable at another,
transcending in its negotiation State lines, will be remitted to Congressional
action, and with respect to its creation, its formation, its negotiation, with
respect to all the rights and liabilities which may arise under it, the people,
stunned with the eternal dissonance of conflicting decisions and judgments of
forty-eight or fifty tribunals of last resort in the States upon the subject of
interstate negotiable paper, will require Congress to act therein, and that,
unconstitutional as I now deem it or think it, it will as a matter of necessity be
done, and in any such legislation with respect to that paper, the whole bulk of it,
the personal and peculiar conditions of litigants will not be inquired about, but
simply whether the one party or the other is entitled to relief or liable to
recovery against him by reason of being a party to interstate commercial paper,
negotiable and payable and suable under the action of Congress which may
finally take place upon that subject. * * *
'Nor do I think with the Senator from New York that we are discharged from
duty or released from our obligation to legislate upon the subject of trusts
because the States have a right to do so.' 21 Cong.Rec. 25562557.
And see Note. 48, infra.
46

Senator George, a member of the Senate Judiciary Committee which redrafted

the Sherman Act before its final passage, stated on the floor of the Senate that,
'The bill has been very ingeniously and properly drawn to cover every case
which comes within what is called the commercial power of Congress. * * * It
is well known that the great evil of these combinations, these conspiracies, as
they are called, these monopolies, as they are denominated by the bill, consists
in the fact that by combination, by association, there have been gathered
together the money and the means of large numbers of persons, and under these
combinations, or conspiracies, or trusts, this great aggregated capital is wielded
by a single hand and guided by a single brain, or at least by hands and brains
acting in complete harmony and co-operation, and that in this way, by this
association, by this direction of this immense amount of capital, by one
organized will, to a very large extent, these wrongs have been perpetrated upon
the American people.' 21 Cong.Rec. 3147.
Earlier, Senator Sherman had explained, 'I do not wish to single out any

particular trust or combination. It is not a particular trust, but the system I aim
at.' 21 Cong.Rec. 2457. And in the House, Representative Stewart, delivering
the last speech preceding the unanimous adoption of the present Act, stated '* *
* The provisions of this trust bill are just as broad, sweeping, and explicit as the
English language can make them to express the power of Congress over this
subject under the Constitution of the United States. * * *' 21 Cong.Rec. 6314.
Compare Kidd v. Pearson, 128 U.S. 1, 9 S.Ct. 6, 32 L.Ed. 346, and United
States v. E.C. Knight Co., 156 U.S. 1, 15 S.Ct. 249, 39 L.Ed. 325, with
Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 20 S.Ct. 96, 44
L.Ed. 136 and United States v. American Tobacco Co., 221 U.S. 106, 31 S.Ct.
632, 55 L.Ed. 663.
47

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

48

For example, the following colloquy occurred in the House during the debate
on passage of the Clayton Act:
'Mr. Barton. We had an illustration recently where a big fire insurance company
came into the State where local insurance companies have been doing business,
not confined to the border of the State, and cut prices in that immediate locality
until we had in three States 40 or 50 local companies put out of business, and
then the price was put back where it was profitable to the company. Might not
his same condition exist where we started a wholesale house in a State where
their territory was confined to the Statemight it not be a reduction of prices
for putting that institution out of business?
'Mr. Webb. If the purpose is to wrongfully injure or destroy a competitor, this
section will cover such practice; but insurance companies are not reached, as
the Supreme Court has held that their contracts or policies are not interstate
commerce.
'Mr. Barton. Is it not right that they should come within the law?
'Mr. Webb. Yes.' 51 Cong.Rec. 9390.
So far as appears, this was the only mention of the insurance cases during the
discussions leading to passage of the Clayton Act, 38 Stat. 730. And, as in
1890, when the Sherman Act was under consideration, the reference to these
cases showed dissatisfaction with them. See note 45, supra.

49

29(b), 41 Stat. 988, 1000, 46 U.S.C.A. 885(b).

50

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

It charges an agreement (a) to fix premium rates, (b) to fix commissions paid,
(c) to adopt reclassifications of risks on the basis of which premium rates are
fixed, (d) to adhere to standard terms, conditions, and clauses, in the insurance
contract, (e) to withhold reinsurance facilities from nonmembers of the SouthEastern Underwriters' Association, (f) to withdraw from and refuse to enter
agencies representing non-members, (g) to boycott and withhold patronage
from purchasers of insurance from non-members, (h) to disparage the services
and facilities of non-members, (i) to establish and maintain rating bureaus to
police and maintain these agreements, (j) to establish and maintain boards and
groups of agents for the same purpose. There is no allegation that commissions
are paid otherwise than on the entering into of the contracts. The indictment
thus charges only restraints in the terms of the insurance contracts and
restraints, by boycotts, in competition in entering into such contracts and in
entering into contracts of reinsurance.

E.g., Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357; Ducat v. Chicago, 10 Wall.
410, 19 L.Ed. 972; Liverpool Insurance Co. v. Massachusetts, 10 Wall. 566, 19
L.Ed. 1029; Philadelphia Fire Association v. New York, 119 U.S. 110, 7 S.Ct.
108, 30 L.Ed. 342; Hooper v. California, 155 U.S. 648, 15 S.Ct. 207, 39 L.Ed.
297; Noble v. Mitchell, 164 U.S. 367, 17 S.Ct. 110, 41 L.Ed. 472; Orient
Insurance Co. v. Daggs, 172 U.S. 557, 19 S.Ct. 281, 43 L.Ed. 552; New York
Life Insurance Co. v. Cravens, 178 U.S. 389, 20 S.Ct. 962, 44 L.Ed. 1116;
Nutting v. Massachusetts, 183 U.S. 553, 22 S.Ct. 238, 46 L.Ed. 324; New York
Life Ins. Co. v. Deer Lodge County, 231 U.S. 495, 34 S.Ct. 167, 58 L.Ed. 332;
Northwestern Mutual Life Ins. Co. v. Wisconsin, 247 U.S. 132, 38 S.Ct. 444,
62 L.Ed. 1025; National Union Fire Insurance Co. v. Wanberg, 260 U.S. 71, 43
S.Ct. 32, 67 L.Ed. 136; Bothwell v. Buckbee-Mears Co., 275 U.S. 274, 48 S.Ct.
124, 72 L.Ed. 277. See also Doyle v. Continental Ins. Co., 94 U.S. 535, 24
L.Ed. 148, overruled on other grounds by Terral v. Burke Const. Co., 257 U.S.
529, 42 S.Ct. 188, 66 L.Ed. 352, 21 A.L.R. 186.

The decisions of this Court that the negotiation of a contract between citizens of
different states is not interstate commerce were known to and accepted by
Congress. In the course of the debates in the Senate on the original bill
introduced by Senator Sherman, Senator Turpie, discussing the extent of the
federal commerce power, stated, 'I recollect one judicial decision upon this

subject very definitely. The Supreme Court has decided that insurance is not
commerce. * * *' 21 Cong.Rec. 2556. During subsequent debates on that bill
Senator Hoar, who later took charge of the revised bill reported by the Judiciary
Committee and ultimately enacted, 21 Cong.Rec. 3145 et seq., denied the
existence of federal substantive power, under the commerce clause or article III,
2, over contracts between citizens of different states, asserting that Senator
Sherman's bill could be supported only as a regulation of the 'importation
transportation, or sale of articles. * * *' 21 Cong.Rec. 2567. See also the
statements of Senator Eustis at 21 Cong.Rec. 2646, 26512.
4

See Senator Sherman's original bill, S. 3445, 50th Cong., S. 1, 51st Cong., and
his statement at 21 Cong.Rec. 2562. Texts of the bill throughout its various
amendments are set out in Bills and Debates Relating to Trusts, Sen.Doc. No.
147, 57th Cong., 2nd Sess. (1903).

H.R.Rep. No. 1707, 51st Cong., 1st Sess., p. 1. See also the statement on the
floor of the House by Mr. Culberson, in charge of the bill, 'There is no attempt
to exercise any doubtful authority on this subject, but the bill is confined strictly
and alone to subjects over which, confessedly, there is no question about the
legislative power of Congress. * * *' 21 Cong.Rec. 4089. And see the statement
of Senator Edmunds, chairman of the Senate Judiciary Committee which
reported out the bill in the form in which it passed, that in drafting that bill the
committee thought that 'we would frame a bill that should be clearly within our
constitutional power, that we would make its definition out of terms that were
well known to the law already, and would leave it to the courts in the first
instance to say how far they could carry it or its particular deinitions as
applicable to each particular case as the occasion might arise.' 21 Cong.Rec.
3148. Similarly Senator Hoar, a member of that committee who with Senator
Edmunds was in charge of the bill, stated 'Now we are dealing with an offense
against interstate or international commerce, which the State cannot regulate by
penal enactment, and we find the United States without any common law. The
great thing that this bill does, except affording a remedy, is to extend the
common-law principles, which protected fair competition in trade in old times
in England, to international and interstate commerce in the United States.' 21
Cong.Rec. 3152.

Messages of the Presidents 6901, 69867. See the Report of the

Commissioner of Corporations, 1905, p. 5, urging that Congress 'so legislate
upon the subject as to afford an opportunity to present to the Supreme Court the
question whether insurance as now conducted is interstate commerce, and
hence subject to Federal regulation.'
See also Sen.Doc. No. 333, 59th Cong., 1st Sess. (1906), for a message of

President Roosevelt proposing an insurance code for the District of Columbia

and enclosing a report of a convention of State officers called by him to
investigate wrongful insurance methods.
7

See e.g., 29 American Bar Association Reports 538 (1906); 24 Annals of

American Academy of Political and Social Sciences (1904) 69, 7883; 26 Id.
(1905) 681; Dryden, An Address no the Regulation of Insurance by Congress
(1904); 1 Moody's Magazine (19056) 271 et seq.; 38 Smerican Law Review
(1904) 181.

H.R. 7054, 58th Cong., 2d Sess. (1903); H.R. 13791, 58th Cong., 2d Sess.
(1904); H.R. 16274, 58th Cong., 3d Sess. (1904); S. 7277, 58th Cong., 3d Sess.
(1905); H.R. 15092, 59th Cong., 1st Sess. (1906); H.Res. No. 417, 59th Cong.,
1st Sess. (1906). See footnote 9 infra. See also S. 1743, 56th Cong., 1st Sess.
(1899).

Compare the debates in the House on the bill, S. 569, to establish a Department
of Commerce and Labor. As reported by the House Committee on Interstate
and Foreign Commerce 6 of the bill provided for the creation of a bureau of
insurance to 'exercise such control as may be provided by law' over insurance
companies and to 'foster, promote, and develop' the insurance business by
collecting and compiling statistics. H.R.Rep. No. 2970, 57th Cong., 2d Sess.,
12, 15. After extended debate, in which the provision was objected to for want
of power in the federal government to regulate the insurance business and as a
threat to the continuance of existing state regulation, 36 Cong.Rec. 8689, 872
3, 90811, 91921, and in which it was insisted by proponents of the bill,
as now, that insurance is commerce, 36 Cong.Rec. 876 7, amendments to strike
all reference to insurance from the bill were adopted. 36 Cong.Rec. 911, 921. A
proposed amendment to prohibit the use of the mails by insurance companies
doing business in violation of state law was likewise defeated. 36 Cong.Rec.
9223. The conference committee then inserted the provision, adopted as 6
of the Act, 32 Stat. 828, authorizing the Bureau of Corporations to compile and
publish useful information concerning corporations doing business in the
United States and engaged in interstate or foreign commerce, 'including
corporations engaged in insurance.' Upon assurances that this section 'simply
authorizes information being secured' and that 'there is nothing in this measure
that contravenes the votes of the House on that subject', 36 Cong.Rec. 2008, the
conference report was adopted. The insurance provisions were not in the bill as
it had originally passed the Senate, and the conference report was adopted by
that body without debate. 36 Cong.Rec. 1990, 2035 6.
The Commissioner of Corporations made a study of state legislation, but
reported that 'in view of the decisions of the Supreme Court I have not felt

warranted in trying to assume jurisdiction over insurance companies for the

purpose of investigation.' Report of the Commissioner of Corporations, 1905, p.
5; see Report of the Commissioner of Corporations, 1904, pp. 29 33; Report of
the Secretary of Commerce and Labor, 1903, p. 26.
10

Mr. Webb's statement was made in answer to an inquiry by Mr. Barton as to

whether the proposed section 2 of the Clayton Act would render illegal certain
practices if engaged in by wholesalers, in the course of which Mr. Barton
referred to an instance of such practices committed by insurance companies.
The colloquy continued:
'Mr. Barton. It is not right that they should come within the law?
Mr. Webb. Yes.'
Assuming that Mr. Webb's answer related to insurance companies, and
expressed a desire that such companies should be included within the
prohibitions of the Sherman and Clayton Acts, but were not, nothing was done
to amend those Acts so as to carry out that desire or which would require this
Court to reexamine the scope of federal power over insurance.

11

For cases arising under the Anti-Trust laws in which this Court has so stated see
Hopkins v. United States, 171 U.S. 578, 602, 19 S.Ct. 40, 49, 43 L.Ed. 290;
Blumenstock Bros. Advertising Agency v. Curtis Publishing Co., 252 U.S. 436,
443, 40 S.Ct. 385, 387, 64 L.Ed. 649; Federal Base Ball Club v. National
League, 259 U.S. 200, 209, 42 S.Ct. 465, 466, 66 L.Ed. 898, 26 A.L.R. 357;
Standard Oil Co. v. United States, 283 U.S. 163, 168, 169, 51 S.Ct. 421, 423,
75 L.Ed. 926; and see Northern Securities Co. v. United States, 193 U.S. 197,
372, 377, 24 S.Ct. 436, 475, 477, 48 L.Ed. 679 (dissenting opinion). See also
United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 410, 42 S.Ct. 570,
583, 66 L.Ed. 975, 27 A.L.R. 762; United Leather Workers' International
Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 470, 471, 44 S.Ct. 623,
627, 68 L.Ed. 1104, 33 A.L.R. 566, relying on Ware & Leland v. Mobile
County, 209 U.S. 405, 28 S.Ct. 526, 52 L.Ed. 855, 14 Ann.Cas. 1031, a case
applying the insurance rule to cotton futures contracts not calling for interstate
shipment or delivery.

12

One private suit was brought in the District of Columbia to enjoin ratefixing by
an underwriters' association; the suit was dismissed on the ground that
insurance was not commerce. Lown v. Underwriters' Ass'n, Sup.Ct.D.C. June
23, 1915, reported in 6 Federal Anti-Trust Decisions 1048.
Over 252 criminal prosecutions and 272 suits at equity have been instituted by
the United States under the Sherman Act, Hamilton, Antitrust in Action,

Monograph No. 16, prepared for the Temporary National Economic Committee
(1940) 76, 78, and over 103 private actions have been brought, Note, 49 Yale
L.J. 284, 296 (1939).
13

In addition to the bills at note 7, supra, see H.J. Res. 31, 60th Cong., 1st Sess.
(1907); S.J. Res. 103, 63rd Cong., 2d Sess. (1914); H.J.Res. 194, 63rd Cong.,
2d Sess. (1914); S.J.Res. 58, 64th Cong., 1st Sess. (1915); S.J.Res. 51, 73rd
Cong., 1st Sess. (1933), all proposing constitutional amendments.

Insurance commissions were established by New Hampshire in 1851,

(N.H.Laws 1851, c. 1111); by Massachusetts in 1852 (Mass.Laws 1852, c.
231); by Rhode Island in 1855 (R.I.Laws, October 1854, p. 17, 17). By 1890,
when the Sherman Act became law, seventeen states had established
supervisory authorities. Patterson, The Insurance Commissioner in the United
States (1927) p. 536, n. 62.

See particularly argument of New York Life Insurance Company in New York
Life Ins. Co. v. Deer Lodge County, 1913, 231 U.S. 495, 496, 34 S.Ct. 167, 58
L.Ed. 332, and that for Paul in Paul v. Virginia, 1868, 8 Wall. 168, 19 L.Ed.
357.

Paul v. Virginia, 1868, 8 Wall. 168, 183, 19 L.Ed. 357; Hooper v. California,
1895, 155 U.S. 648, 655, 15 S.Ct. 207, 210, 39 L.Ed. 297; Noble v. Mitchell,
1896, 164 U.S. 367, 370, 17 S.Ct. 110, 111, 41 L.Ed. 472; New York Life
Insurance Company v. Cravens, 1900, 178 U.S. 389, 401, 20 S.Ct. 962, 967, 44
L.Ed. 1116; New York Life Insurance Co. v. Deer Lodge County, 1913, 231
U.S. 495, 34 S.Ct. 167, 58 L.Ed. 332; Bothwell v. Buckbee-Mears Co., 275
U.S. 274, 48 S.Ct. 124, 72 L.Ed. 277; Ducat v. Chicago, 10 Wall. 410, 19 L.Ed.
972; Liverpool Insurance Co. v. Massachusetts, 10 Wall. 566, 19 L.Ed. 1029;
Philadelphia Fire Association v. New York, 119 U.S. 110, 7 S.Ct. 108, 30 L.Ed.
342; Nutting v. Massachusetts, 183 U.S. 553, 22 S.Ct. 238, 46 L.Ed. 324;
Northwestern Mutual Life Insurance Co. v. Wisconsin, 247 U.S. 132, 38 S.Ct.
444, 62 L.Ed. 1025.

E.g., Champion v. Ames, 188 U.S. 321, 23 S.Ct. 321, 47 L.Ed. 492 (lottery
tickets); Electric Bond & Share Co. v. S.E.C., 303 U.S. 419, 58 S.Ct. 678, 82
L.Ed. 936, 115 A.L.R. 105 (holding companies).

E.g., Pennsylvania R. Co. v. Public Service Comm., 250 U.S. 566, 40 S.Ct. 36,
64 L.Ed. 1142.

McCarroll v. Dixie Greyhound Lines, Inc., 309 U.S. 176, 60 S.Ct. 504, 84
L.Ed. 683; Duckworth v. Arkansas, 314 U.S. 390, 62 S.Ct. 311, 86 L.Ed. 294,
138 A.L.R. 1144.

Furst v. Brewster, 282 U.S. 493, 51 S.Ct. 295, 75 L.Ed. 478, and cases cited.

Alpha Portland Cement Co. v. Massachusetts, 268 U.S. 203, 45 S.Ct. 477, 69
L.Ed. 916, 44 A.L.R. 1219; Cudahy Packing Co. v. Hinkle, 278 U.S. 460, 49
S.Ct. 204, 73 L.Ed. 454.

The Government contends that at least Count One of the present indictment
conforms to this interpretation of the antitrust laws. Under the Criminal Appeals
Act we have no jurisdiction to construe or reconstrue the indictment. My view
would require remand to the District Court or the Circuit Court of Appeals for
consideration in the light of our opinion.

10

In 1943, gross premiums taxes on insurance companies yielded 40 states an

aggregate of $96,108,000 and the remaining eight an estimated $26,892,000,
making a total of $123,000,000. State Tax Collections in 1943, pamphlet
published by Bureau of the Census, p. 8.

11

It is impossible to believe that Congress, if it ever intended to assume

responsibility for general regulation of insurance, would have made the
antitrust laws the sole manifestation of its purpose. Its only command is to
refrain from restraints of trade. Intelligent insurance regulation goes much
further. It requires careful supervision to ascertain and protect solvency,
regulation which may be inconsistent with unbridled rate competition. It
prescribes some provisions of policies of insurance and many other matters
beyond the scope of the Sherman Act.
Also it requires sanctions for obedience far more effective than the $5,000
maximum fine on corporations prescribed by the antitrust laws. Violation of
state laws are commonly punishable by cancellation of permission to do
business thereina drastic sanction that really commands respect.
The antitrust laws sanctions are little better than absurd when applied to huge
corporations engaged in great enterprise. In the two related Madison Oil cases
(see United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84
L.Ed. 1129) fifteen of the seventeen corporations convicted had combined
capital and surplus reported to be $2,833,516,247. The total corporate fines on
them were $255,000, making a ratio of fines to corporate capital and surplus of
less than 1/100 of one per cent. In addition, fines of $180,000 were assessed
against individuals. In the automobile financing case (see United States v.
General Motors Corp., 7 Cir., 121 F.2d 376, certiorari denied 314 U.S. 618, 62
S.Ct. 105, 86 L.Ed. 497) General Motors Corporation, three wholly owned
subsidiaries and no individuals were convicted. The fines were $20,000. Capital
and surplus were then reported at $1,047,840,321, the fine being somewhat less
than 1/500 of 1 per cent thereof.

In each case the corporate fines were $5000, the maximum permitted by the
statute. 15 U.S.C. 1, 15 U.S.C.A. 1.
12

The last agency to investigate insurance problems was the Temporary National
Economic Committee. It made no recommendation of federal control. Its
chairman, Senator O'Mahoney, after reviewing carefully the problems caused
by the concentration of economic power in the hands of the insurance
companies an the abuses of the business, said: 'Therefore I say again that
personally I would not support any law that would undertake to do away with
state regulation of insurance, and there never has been suggested to me or to
any member of the TNEC or to the committee as a whole any thought of doing
away with state regulation or imposing federal supervision.' 26 American Bar
Association Journal 913. Both dominant political parties have supported the
present system. In 1940, the Democratic platform contained this provision: 'We
favor strict supervision of all forms of the insurance business by the several
States for the protection of policyholders and the public.' The Republican
platform of that year contained this provision: 'We favor a continuance of
regulation of insurance by the several States.'

13

President Theodore Roosevelt twice recommended that Congress assume

control of insurance. Message of December 6, 1904, 39 Cong.Rec. 12, and
Message of December 5, 1905, 40 Cong.Rec. 95.

14

See Insurance Blue Book (Centennial Issue, 1876) Ch. VI, Fire Insurance, p.
32.

15

In 1866, a bill was introduced in the House, providing for creation of a national
bureau of insurance in the Treasury Department. It was not passed. H.R. 738,
39th Cong., 1st Sess.
In 1868, a bill was introduced in the Senate proposing a national bureau of
insurance, but never passed. S. 299, 40th Cong., 2d Sess.
In 1892, a bill was introduced in the House creating the office of Commissioner
of Insurance. It was never reported out of committee. H.R. 9629, 52d Cong., 1st
Sess.
In 1897, a bill was introduced in the Senate to declare that insurance companies
doing business outside of the states of their incorporation were to be deemed to
be engaged in interstate commerce. It was not reported out of committee. S.
2736, 55th Cong., 2d Sess.
After President Roosevelt's recommendation of 1904, Senator Dryden
introduced a bill in the Senate to establish a bureau of insurance in the

Department of Commerce. The bill died in committee. S. 7277, 58th Cong., 3d

Sess.
After President Roosevelt's second recommendation, the House Judiciary
Committee reported that Congress had no power to regulate insurance, and said:
'The views of the Supreme Court have practically met the approval of the bar
and business men of the United States as being in accordance with law and
common sense.' H.R.Rep. 2491, 59th Cong., 1st Sess., March 23, 1906, p. 14.
The Senate Committee on the Judiciary made a similar report. Sen.Rep. 4406,
59th Cong., 1st Sess., 1906.
In 191415, resolutions were introduced in both the House and the Senate
proposing an amendment to the Constitution to the effect that Congress should
have power to regulate the business or commerce of insurance throughout the
United States and its territories or possessions. The resolutions were not
reported out of the Judiciary Committee. S.J.Res. 103, 63d Cong., 2d Sess.;
H.J.Res. 194, 63d Cong., 2d Sess.; S.J.Res. 58, 64th Cong., 1st Sess.
In 1933, a resolution was introduced for a similar constitutional amendment
which died in committee. S.J.Res. 51, 73d Cong., 1st Sess.
Moreover, by exceptions and exemptions Congress has indicated a clear intent
to avoid interference with state supervision. Insurance corporations are
excepted from those who may become bankrupts. 11 U.S.C. 22, 11 U.S.C.A.
22. Insurance issued by any issuer under state supervision is exempted from
the Securities Act. 15 U.S.C. 77c(a)(8), 15 U.S.C.A. 77c(a)(8). Insurance
companies supervised by state authority are exempted from regulation as
investment companies. 15 U.S.C. 80a2(a)(17) and 80a3(c)(3), 15
U.S.C.A. 80a2(a)(17), 80a3(c)(3).
16

In New York Life Insurance Company v. Deer Lodge County, 231 U.S. 495,
502, 34 S.Ct. 167, 169, 58 L.Ed. 332, the Court said: 'To reverse the cases,
therefore, would require us to promulgate a new rule of constitutional inhibition
upon the States, and which would compel a change of their policy and a
readjustment of their laws. Such result necessarily urges against a change of
decision.'

17

In resisting pressure to federalize insurance supervision Congress has followed

the advice of some of the best informed champions of the public interest on
insurance problems. One was Louis D. Brandeis. Speaking as counsel for the
Protective Committee of Policyholders in the Equitable Life Assurance Society,
before the Commercial Club of Boston, on October 26, 1905, Mr. Brandeis
said:

'The sole effect of a Federal law would bethe sole purpose of the Dryden bill
(see note 15, supra) must have beento free the companies from the careful
scrutiny of the commissioners of some of the States. It seeks to rob the State
even of the right to protect its own citizens from the legalized robbery to which
present insurance measures subject the citizens, for by the terms of the bill a
Federal license would secure the right to do business within the borders of the
State, regardless of the State prohibitions, free from the State's protective
regulations. With a frankness which is unusualand an effrontery which is
commonamong the insurance magnatesthis bill is introduced in the Senate
by John F. Dryden, the president of the Prudential Life Insurance Company
the company which pays to stockholders annual dividends equivalent to 219.78
per cent. for each dollar paid in on the stock; the company which devotes itself
mainly to insuring the working men at an expense of over 37.28 cents on every
dollar of premiums paid; the company which, in 1904, made the worst record
of lapsed and surrendered industrial policies. * * *
'Federal supervision is also advocated by Mr. James M. Beck (formerly
Assistant Attorney General of the United States), the counsel for the Mutual
Life Insurance Company, and his main argument against State supervision
appears to be that the companies pay, in the aggregate, for fees and taxes in the
several States $10,000,000, which he says is twice as much as is necessary to
cover the expense of proper supervision. Ten million dollars is a large sum in
itself, but a very small one compared with the aggregate assets or the aggregate
expense of management. Mr. Beck's company paid in 1904 $1,138,663 in taxes
and fees. Its management expenses were $15,517,520, or nearly fourteen times
as much. Our Massachusetts savings banks paid in the year ending October 31,
1904, $1,627,794.46 in taxes to this Commonwealth: that is $80,890.02 more
than the whole expense of management, which was.$1,546,904.44.
'Doubtless the insurance departments of some States are subjects for just
criticism. In many of the States the department is inefficient, in some doubtless
corrupt. But is there anything in our experience of Federal supervision of other
departments of business which should lead us to assume that it will be freer
from grounds of criticism or on the whole more efficient than the best
insurance department of any of the States? For it must be remembered that an
efficient supervision by the department of any State will in effect protect all the
policy-holders of the company wherever they may reside. Let us remember
rather the ineffectiveness for eighteen long years of the Interstate Commerce
Commission to deal with railroad abuses, the futile investigation by
Commissioner Garfield of the Beef Trust, and the unfinished investigation into
the affairs of the Oil Trust in which he has since been engaged. Federal
supervision would serve only to centralize still further the power of our
Government and to increase still further the powers of the corporations.'

Mr. Justice Brandeis for a unanimous Court wrote, in Bothwell v. BuckbeeMears Co., 1927, 275 U.S. 274, 276, 48 S.Ct. 124, 125, 72 L.Ed. 277: 'A
contract of insurance, although made with a corporation having its office in a
State other than that in which the insured resides and in which the interest
insured is located, is not interstate commerce.' He joined in other similar
decisions in Northwestern Mutual Life Insurance Co. v. Wisconsin, 247 U.S.
132, 38 S.Ct. 444, 62 L.Ed. 1025; National Union Fire Insurance Co. v.
Wanberg, 260 U.S. 71, 43 S.Ct. 32, 67 L.Ed. 136.
18

Thirty-five states of the Union have filed amicus curiae briefs with us,
protesting against the decision which the Court is promulgating.