United States v. Patten

Background

The United States brought criminal charges against several defendants accused of conspiring to “run a corner” in the cotton market during the 1909–1910 crop year. The indictment alleged the conspirators bought large amounts of cotton for future delivery on the New York Cotton Exchange to control the available supply and force prices up nationwide. The trial court dismissed several counts, and the Government appealed only counts seven and eight, which described the alleged cornering scheme.

Reasoning

The central question was whether a conspiracy to corner the available supply of a staple commodity like cotton — thereby artificially raising prices and forcing buyers to pay more or reduce production — falls within §1 of the Anti‑trust Act (making conspiracies that restrain interstate trade criminal). The Court held that the statute covers such a scheme because it would directly and materially impede interstate commerce. The opinion explains that the law reaches not only agreements among traders but also conspiracies that create artificial conditions and compel others to act, and that conspirators are chargeable with the necessary and direct consequences of their plan. The Court therefore found the dismissal of counts seven and eight to be erroneous and reversed that part of the lower court’s judgment.

Real world impact

The decision allows federal criminal prosecution to proceed against alleged market‑cornering schemes that control supply and raise prices across State lines. It treats effective manipulation of a nationwide commodity market as a direct restraint on interstate commerce. The case was sent back to the lower court for further proceedings, so the ruling allows prosecution but is not a final verdict on guilt.

Dissents or concurrances

Justices Lurton and Holmes dissented. Justice Lurton said the lower court had properly held the counts defective because they did not allege the technical elements of a corner; the Chief Justice joined that view.