Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1902-03-11
Pnocsedings Directed by Attorney General
of the United States,
LEGAL TEST OF PROPOSED CONSOLIDATION
Great Northern and Northern Pacific Named
as Defendants.
y 1.eeR SHERMAN ANTITRUST ACT
BiI ReA Merging of Competing
Railroad conspiracy in Re-
straih of Trade or
Commerce.

ST. PAUL, Mimi, March 1o.-By direction
bf the attorney general OF the United States
y bill was filed at st. Paul today in the cir
tcuit court OF the United States for the
district Of Minnesota In the case Of the
United States, complainant, against the
Northern Securities company, the Great
Northern Railway company and others, de-
pendants. to test the legality Of the alleged
combination or merger of the two roads
and others named in the bill. The action is
brought under the act Of July 2. 1890, known
as the Sherman antitrust act.
After recitng the fact that the Northern
Securities company is a corporation organ
azed 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 rail-
road under the laws of Wisconsin and that
the two last named companies are common
carriers doing interstate business and
that these companies at and prior to the
doing OF the acts complained OF owned and
operated two separate. independent, parallel
and competing lines Of railway aggregating
over $500 miles in length, the petition goes
on to say that they were the only trans
continental lines 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 competi-
tion with one another for freight and pas
senger traffic among the several states OF
the United States and between such states
and foreign countries, each system connect
ing at ita eastern terminals 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 tc
foreign countries.
Goes Back to Receivership.
'That prior to the year 1898 the Northern
Pacific system was owned and operated b.
the Northern Pacific Railroad company, q
corporation organized under certain acti
OF congress; that during that year the com.
pany became insolvent and was placed II
the hands Of a receiver. While in thi.
condition, awaiting foreclosure and sale, al
arrangement was entered into between 4
majority Of the ,bondhnlders Of the Northern
Pacific Railway company and the Greai
Northern Railway company for a virtua
consolidation Of the two and placing tn,
control Of the Northern Pacific system II
the hands OF the Great Northern. Thil
Arrangement contemplated the sale undeI
foreclosure OF the Northern Pacific compan,
to committee Of bondhoders who shoul,
organize a new corporation to be known al
the Northern Pacific Railway company. One
half Of the capital stock Of the new com
pany was turned over to the Great Northern
company. which in turn was to guarante,
the bonds Of the Northern Pacific Railwa,
company.
Defeated by Supreme Court.
''The carrying out OF this arrangement.
says the petition. was defeated by tn,
decision Of the United States supreme cour
In the case OF Pearsall against the Grea
Northern Railway company was decides
March 80. 1896, in which It was held tha
the practical effect would be the consoii
dation of two parallel and competing line
OF railway and the giving to the defend
ant, the Great Northern Railway company
a monopoly OF all trafic in the northern
half OF the state OF Minnesota as we'll of al
transcontinental trafic north Of the line o
the Union Pacific to the detriment of tn
public. and in violation OF the laws OF tn
state OF Minnesota.
EARLY in the year 1901 the defendants
the Great Northern and Northern Pacifi
Railway companies, in contemplation OF tn
ultimate placing of the Great Northern an
Northern Pacific systems under a commo
source of control. united in the purchas
OF the total capital stock OF the Chicago
Burlington Quincy Railway company O
Illinois, giving the joint bonds OF the Grea
Northern and Northern Pacific Railwa
companies.
Securing Control OF Burlington.
Elm this manner the Great Northern an
Northern Pacific Railway companies se
cured control OF the vast system of line
known as the Burlington system, abou
5000 miles In length. The attempt to tur
over controlling interest Of the Norther
Pacific Railway company to the Grea
Northern having thus in the year 1896 bee
defeated by a decision Of the supreme couI
the defendants. James ]. Hill and his az
soclate stockholders. OF the Great North
ern. owning or controlling a majority
its stocks and the defendants. J. Pierpor
Morgan and his associates. owning or cor
T. trolling a majority of the stock OF u
Northern Pacific company entere
into an unlawful combination or conspirac
60 effect virtual consolidation OF II
Northern Pacific and Great Northern syl
TENS and to place restraint upon all con
petitve interstate and foreign trade or con
merce carried on by them and to monopolii
or attempt to monopolize the same, ar
60 suppress the competition existing b,
tween said railway systems In said inte
state and foreign trade. or eommerc
through the instrumentality and by Il
means following, to-wit; A holding CO
poration. to be called the Northern S
curities company, was 10 be formed und
the laws OF New Jersey. with a capt.
stock OF tlOo. 900 900. to which. in exchanl
for It's own capital stock upon q certa
basis and at a certain rate. was 70
n turned over and transferred the eapit
stock or q controlling interest In Il
capital stock Of each OF the defendant raj
way companies. In this mann
The individual stockholders OF the two Il
dependent and competing railway cor
panies were TO be eliminated and a sing
common stockhOlder. the Northern sscuT
sies company, was to be substituted; Il
interest OF the individual stockholders
the property and franchises Of the two raj
way companies was 70 terminate. being tn
n