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As indicated earlier, the U.S. steel corporation was formed in 1901 by a merger that combined the assets of 180 companies. U.S. steel’s market share began to decline almost immediately after its formation.

From 1907 to 1911, the president of U.S. steel, Judge Elbert Gary, sponsored the industry get – together known as the Gary dinners. The purpose of these dinners, as Gary frankly admitted, was to promote industry solidarity and prevent outbreaks of price competition.

These meetings were calculated to influence people to maintain their prices. There is no doubt of that but as I understand the vice of the law is in obligating to maintain prices . . . it was intended to influence people so far as we legitimately could maintain fair prices, each one for himself using his best judgment, after full knowledge of the business of all.

In 1911, the government challenged the merger that led to the formation of U.S. steel as monopolization in restraint of trade, a violation of section 2 of the Sherman act, and asked for the dissolution of the company. Under the standard oil rules, the government had to prove that U.S. steel had a monopoly position and that it had obtained that position by methods that were not normal industrial development.

The majority of the Supreme Court felt, however, that the government had failed to show that U.S. steel had ever attained a monopoly. Its market share had declined. It had had to meet with rivals to control prices, suggesting an inability to control prices on its own.

The majority of the court noted the absence, on the part of U.S. steel, of the exclusionary behavior that had been laid to standard oil. By a vote of 4 to 3, the merger that had created U.S. steel was legitimized, and the stage was set for the long decline illustrated in figure 4-4. Section 2 of the Sherman act lay dormant for a generation.

At one point, 251 U.S. 417 (1920), at 449, the majority points out that the government failed to charge the firms that attended the Gary dinners as confederates of U.S. steel. This suggests that a charge of conspiracy to monopolize in violation of section 2 of the Sherman act might have been acceptable to the court. But under the U.S. judicial system, courts are likely oracles; they answer only the questions put to them. The government did not ask the courts de decide if U.S. steel was guilty of conspiracy to monopolize.