This suit was brought by tobacco warehousemen to restrain the enforcement of a statute of Georgia, approved March 28, 1935, fixing maximum charges for handling and selling leaf tobacco. Ga.Laws 1935, pp. 476-478.
The statute was assailed as an arbitrary and capricious exercise of state power, repugnant to the Fourteenth Amendment of the Federal Constitution, and as placing a direct burden upon interstate commerce in violation of the commerce clause. The hearing in the District Court was by three judges (28 U.S.C. § 380 (28 U.S.C.A. § 380)) and, upon findings, of fact and conclusions of law, a final decree was entered dismissing the bill of complaint, one judge dissenting. The case comes here on appeal.
The facts found by the District Court with respect to the tobacco industry in Georgia and the nature of the transactions at the warehouses are not in dispute. It appears that this industry is relatively new, beginning in 1917, but by the year 1925 it was becoming well established. The type of tobacco grown in Georgia is the 'bright leaf' which is almost exclusively used in the manufacture of cigarettes. This variety is grown extensively in North Carolina, to a much less extent in South Carolina and Georgia, and to some extent in Virginia, Kentucky, and Tennessee. The acreage planted by the individual farmer in Georgia is comparatively small, but the aggregate acreage is now not only very considerable but is widely distributed over a large area in the southern portion of the state.
The necessity for markets and the early maturity of the tobacco in Georgia presented an opportunity which was early recognized by experienced and skilled warehousemen who were operating in the tobacco belts of North Carolina and other states, where selling seasons began some time after the termination of the selling season in Georgia. With few exceptions, competent warehousemen, and experienced and skilled auctioneers and helpers in handling and selling tobacco are not found in Georgia and must be obtained from other states. There were forty-five warehouses operated in 1935, thirty-nine of which were connected in some capacity with warehouses in North Carolina, Kentucky, Virginia, or Tennessee.
The principal purchasers of the bright leaf tobacco grown in Georgia and elsewhere are limited to a few large manufacturers of cigarettes. These are called 'the Companies.' They purchase tobacco only at warehouse auction sales to which they send or furnish 'buyers.' Each buyer is the representative of one of the competing purchasers and a 'set of buyers,' usually from eight to twelve in number, is made up of representatives from each of the purchasing cigarette manufacturers. The presence of a 'set of buyers' is essential at an auction sale. A town having one or more warehouses is known as a 'market.' By sending a set of buyers to a new warehouse, the manufacturers may recognize a new market, and by refusing to send one to a old market may cause its abandonment; and by sending either one or two sets of buyers to a given market the manufacturers may determine the rapidity with which the accumulated tobacco may be disposed of. There is another class of purchasers known as 'speculators.' these on rare occasions buy tobacco from a grower and have it transported to a warehouse for sale. At auction sales speculators to a limited extent, as compared with buyers, purchase tobacco for a later sale. There is strenuous and expensive competition between warehousemen in securing tobacco from growers to be handled and sold, but in the sale of tobacco there is no competition except such as exists between the respective buyers and speculators at the auction sales, and the bids of the warehousemen themselves.
The tobacco belt in Georgia comprises about twenty counties in the southern part of the state, and in 1935 there were fifteen towns known as 'markets.' Seven of the markets were supplied with one set of buyers and eight were furnished two sets. The 'two set markets' had a total of thirty and the 'one set markets' a total of fifteen warehouses in operation. The quantity of tobacco sold in the warehouses and the average prices ranged from 106,483,019 pounds at 9.86 cents per pound in 1930, to 71,826,352 pounds at 18.91 cents per pound in 1935.