Evening star., 1902-03-11
SUIT AGAINST MERGER
Filed in st. Paul by Attorney
General Knox.
ASKS FOR INJUNCTION
ALLEGES THAT THE PROPOSED
PLAN is ILLEGAL.
Northern Securities Company Held to
Be Mere Attempt to Evade
Antitrust Law.
ASKS FOR INJUNCTION


night says: BY direction Of the Attorney
General of the United States a bill in
equity was filed at st. Paul today in the
circuit court of the United States for the
district of Minnesota in the case of the
United States, complainant, against the
Northern Securities Company, organized
under the laws of New Jersey; the Great
Northern Railway Company, organized
under the laws Of Minnesota; the Northern
Pacific Railway Company, organized under
the laws of Wisconsin; James ]. Hill Of
Minnesota, and William p. Clough, d.
Willis James, John S. Kennedy, ]. Pier
pont Morgan, Robert Bacon, George F.
Baker and Daniel Lamont Of New York,
defendants. to test the legality of the al
legged combination or merger of the two
roads.
The action is brought under the act of
July ,. 1890, known as the sherman anti
trust act.
A concise summary of the petition fol-
lows:
The Governments Bill.
After reciting the fact that the Northern
Securities Company is a corporation organ
lied under the laws of the state Of New
Jersey: that the Great Northern railroad
was organized under the laws of the state
of Minnesota and the Northern Pacific
railroad under the laws Of Wisconsin, and
that the two last named companies are
common carriers, doing an interstate busl-
ness. and that these companies at ana prior
10 the doing of the facts complained OF
owned and operated two separate, 1nde-
pendent parallel and competing lines or
railway. aggregating over 1900 miles In
length, the petition goes on to say that
they were the only transcontinental INES
of railway extending across the northern
tier of states west of the great lakes, from
the great lakes and the Mississippi river
TO the Pacific ocean, and were then engaged
in active competition with one another Tor
freight and passenger traffic among the
several states of the United States and be-
tween such states and foreign countries
each system connecting at its eastern ter
minals, not only with lines Of railway, but
with lake and river steamers to other
states and to foreign countries, and at Its
western terminals with Sea-going vessels
to other states, territories and possessions
of the United States and to foreign coun-
tries.
Proposed Consolidation Defeated.
THAT prior to the year 1893 the Northern
Pacific system was owned and operated by
the Northern Pacific Railroad Company, a
corporation organized under certain acts Of
Congress: that during that year the COM
pany became insolvent and was placed In
the hands of a receiver While in his con-
dition, awaiting foreclosure and sale, an
arrangement was entered into between a
majority of the bondholders Of the North
ern Pacific Railroad Company and the
Great Northern Company for virtual con-
solidation of the two and placing the con-
troll of the Northern Pacific system in the
hands of the Great Northern. This ar
rangement contemplated the sale under
foreclosure of the Northern Pacific Rail-
road Company to a committee of bondhold
ers. who should organize a new corporation
to be known as the Northern Pacific Rail
way Company. One-half of the capital
stock of the new company was turned over
to the Great Northern Company, which, in
turn, was to guarantee the bonds of the
Northern Pacific Railway Company.
The carrying out of this arrangement"
SAYS the petition. was defeated by the de-
cison of the United States Supreme Court
in the case of Pearsall against the Great
Northern Railway Company. which was
decided March 80 1896. in which it was
held that the practical effect would be the
consolidation of two parallel and competing
lines of railway and the giving to the de-
fendant the Great Northern Railway Com
pany a monopoly of all traffic in the north
ern half of the state of Minnesota, as well
as Of all transcontinental traffic north Of
the line of the Union Pacific, to the detri
ment of the public and in violation OF the
laws of the state of Minnesota"
Early in the year 1901 the defendants,
the Great Northern and Northern Pacific
railway companies, in contemplation Of
the ultimate placing Of the Great Northern
common source of control, united in the
purchase Of the total capital stock of the
Chicago, Burlington and Quincy railway
company of Illinois, giving the joint bonds
of the Great Northern and Northern Pa
cific railway companies.
"In this manner the Great Northern and
Northern Pacific railway companies
cured control of the vast system of lines
known as the Burlington system, about s.
600 miles in length.
Another Effort to Consolidate.
1.-The attempt to turn over controlling
interest Of the Northern Pacific railway
company to the Great Northern, having
thus, In the year 1895. been defeated by
decision by the Supreme Court, the de-
PENDANTS. James j. Hill and his associate
stockholders of the Great Northern, own
Ing or controlling a majority Of the stock,
and the defendants, ]. Pierpont Morgan
and his associates, owning or controlling
majority Of the stock of the Northern
Pacific company entered into an
unlawful combination or conspiracy to eff
feet virtual consolidation of the Northern
Pacific and Great Northern systems, and to
place restraint upon all competition inter-
state and foreign trade or commerce car
ried on by them, and to monopoliZe or at
tempt to monopoliZe the same and to sup
press the competition therefore existing be-
tween said railway systems in said inter-
state and foreign trade or commerce, through
the instrumentalty and by the means fol-
lowing, to wit: holding corporation, to
be called the Northern Securities Company,
was to be formed under the laws of New
Jersey, with capital stock Of 500 OOO, 600
to which, in exchange for it's own capital
stock upon a certain basis and at certain
rate. was to be turned over and trans
ferred the capital stock, or q controlling
interest in the capital stock Of each Of the
defendant railway companies. I" In
this manner the individual stockholders Of
these two independent and competing rail-
way companies were to be eliminated, and
single common stockholder. the Northern
Securities Company, was to be substituted; !;
the interest of the individual stockholders
in the property and franchises Of the two
railway companies was to terminate, be-
ing thus converted into an interest in the
property and franchises of the Northern
Securities Company. The individual stock
holders of the Northern Pacific railway
company were no longer to hold an inter-
est in the property or draw their dividends
from the earnings of the Northern Pacific
system, and the individual stockholders OF
the Great Northern railway company were
no longer to hold an interest In the prop
erty or draw their dividends from the earn
ings of the Great Northern system, but
having ceased to be stockholders in the
railway companies. and having become
stockholders in the holding corporation,
both were to draw their dividends from
the earnings of both systems, collected and
distributed by the holding corporation