This was a petition filed by the United States in the District Court for the Southern District of New York against the New York Coffee & Sugar Exchange, the New York Coffee & Sugar Association, corporations of the state of New York, and their officers and directors, for an injunction against the maintenance of an alleged conspiracy in violation of the Anti-Trust Act of July 2, 1890, c. 647, 26 Stat. 209 (Comp. St. § 8820 et seq.), and of its supplementary Act of August 27, 1894, c. 349, 28 Stat. 570, as amended by Act Feb. 12, 1913, c. 40, 37 Stat. 667 (Comp. St. §§ 8831, 8834). The proceeding was brought under the expediting provisions of the Act of February 11, 1903, c. 544, 32 Stat. 823, as amended by Act June 25, 1910, c. 428, 36 Stat. 854 (Comp. St. § 8824). The Attorney General having duly filed a certificate that the case was of general public importance, notice of a motion for an interlocutory injunction was given by the petitioner. The corporate defendants filed an answer which by stipulation was made the answer of the individual defendants. By further stipulation the cause was submitted to final hearing before three Circuit Judges upon petition and answer and the affidavits which had been presented by both sides on the motion for a preliminary injunction. The petition was dismissed, and this is an appeal under section 2, c. 544, of the Act of February 11, 1903, 32 Stat. 823 (Comp. St. § 8825).
The sugar market of the New York Coffee and Sugar Exchange was not organized until the great war in 1914, when foreign sugar exchanges ceased to function. It was intended to afford a world exchange for the purchase and sale of sugar. It continued as an exchange until this country engaged in the war, when it was closed by government direction. Upon the coming of peace, it opened again and has been in operation ever since. The dealings are chiefly in raw sugars. The contracts made are for future delivery. There are no 'wash' sales; i. e., merely bets upon the market in which it is understood between the parties that neither is bound to deliver or accept delivery. But it is true that the sugar is not delivered except in a very small percentage of the contracts. The contracts are settled by offsetting purchases against sales; i. e., by 'matching,' as it is called, or by 'ringing.' This is the same general method of settlement as that which prevails in grain sales for future delivery on the Chicago Board of Trade, and is described by this court in Board of Trade v. Christie Grain & Stock Co., 198 U.S. 236, 247, et seq., 25 Sup. Ct. 637, 49 L. Ed. 1031. The Sugar Clearing Association, codefendant herein with the Exchange, though a separate corporation, is under the same general management as the Exchange and its function is to provide a clearing house in which such ringing settlements are made. About 75 per cent. of the transactions are thus cleared. Nearly all the rest are 'matched' and only a tenth to a quarter of 1 per cent. of the contracts are settled by actual delivery under the rules of the Exchange. The prices at which raw sugar is sold elsewhere for immediate delivery-i. e., of 'spot' sales-vary very much as the prices for future delivery vary on the Exchange. It is clear that the prices for futures have a direct relation to, and effect upon, the prices in 'spot' sales. The prices of raw sugar that prevail in the Exchange are used as a basis for the prices of sugar in the markets of the world.
Cuba is the largest single source of raw sugar for the United States and its crop equals or exceeds the supply from all other sources, domestic or foreign. The petition charges that the Exchange and the Clearing Association are machinery for the promotion of gambling; that, though its contracts for futures on their face are for actual delivery, they really are not intended or expected by either party to result in delivery; that the Exchange rules discourage delivery; that, when in fact actual delivery is sought, purchases are not made on the Exchange, but elsewhere; that the Exchange thus puts in the hands of gamblers the means of influencing directly the prices of sugar to be delivered, and thereby of obstructing and restraining its free flow in trade between Cuba and the United States and between the states.