United States v. E. C. Knight

On 21 January 1895 the Court upheld the ruling against the government. Chief Justice Fuller wrote that the terms of the Sherman Act were not written to directly prohibit monopolies, but were instead aimed at preventing corporations from monopolizing commerce. The Court echoed the Pennsylvania court's separation of manufacturing and transportation as two distinct processes. The refining of sugar was a manufacturing process and not in itself an act connected to the product's transportation across state lines. Because all of the companies named in the Knight case were located in one state, Pennsylvania, the Sherman Act's prohibitions against restraint of interstate trade did not apply. The government, wrote Fuller, had not proven that there was any conspiracy by the refineries to interfere with interstate commerce.

Only Justice Harlan dissented. Harlan believed that the government was the only body powerful enough to protect the American people against corporations gaining control of aspects of everyday life, such as the price of basic foods. Unlike his colleagues, he believed that the "Sugar Trust" did constitute an unlawful combination in restraint of free trade. The American Sugar Refining Company admitted it was in the business of selling its product throughout the United States, not just in Pennsylvania. Harlan believed the company should therefore be subject to national, not just state, regulations.

Harlan noted that the majority opinion had not found the Sherman Act to be unconstitutional, but he felt that the decision defeated the main reason the law had been passed. His analysis would accurately reflect the fate of other labor cases passed before the Court in the coming years. The Knight decision's narrow interpretation of the Sherman Act rendered the law toothless until decisions in the Addyston Pipe & Steel Co. v. United States (1899) and Northern Securities Co. v. United States (1904) cases resurrected the act as an effective instrument of federal regulation.