The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1902-01-03
GOING TO THE BOTTOM PRIN-
CIPLES.

CIPLES.
The Pioneer Press says that if it is
correctly informed Attorney General
Douglas and his associates do not in
tend to confne proceedings in the rail
road merger case, to the legality of the
Northern Securities Co., but to go back
of that and .-assail..--the fundamental
principle of the community of interests
plan of railroad combination
"He will undertake to dispute, +" it
saws, ''the right of the stockholders in
a railroad running through this state
to purchase the stock of parallel and
competing rosd-or if not to purchase
it, at least to vote singly or in COM
bination with others with the intent
to choose a board of directors which
will act in harmony with the board of
directors of the competing road, with
the view of maintaining like rates
and policy of cooperation for the
mutual advantage of both. For this,
he will hold, is virtually an agreement
to maintain rates which is a viola
ton of the antitrust law as interpret
ed by the courts, and also a practical
consolidation of the management of
the properties, which is in violation of
the laws of this state. He will con-
tend that what cannot be done by the
company in its corporate capacity can
not be done by stockholders acting to-
gether in the choice Of a board of di-
rectors that, in either case, the direc-
tors--are merely the agents of the stock
holders who are the owners of the road
and constitute the corporation, and
that if, in their choice of directors,
they select men with the purpose of
carrying out a scheme of common con-
troll of both roads, and if the results
are such. as to give evidence of such
common control, this is sufficient to
establish the actual merger which is
prohibited by the laws of this state.
He will claim that such combined &C
ton of the stockholders of the two
roads is violation in intention and
effect pot only of the spirit but of the
letter of the laws of the state.
-"Bold and radical as is the PROPOSE
ton" continues the Pioneer Press,
"that the holders of stock in one rail
road has no legal right to..spurchase
stock in another and competing rail
road in this state, it would appear to
be necessary foundation of proceed
ings against the Northern Securities
company, and especially against the
stockholders combination by which
they are enabled to exercise control
over both roadside New Jersey con-
Germ being simply convenient but
necessary auxiliary thereto. It will
not, of course, do to say that man has
the right to buy and own stock in a
railroad or other corporation, but has
no right to vote it. For his right to
vote it is an essential incident of own
ership. The two things cannot be
separated. The stakeholder in a cor
poration is part owner of its pro-
perty and has an incontestable right to
participate in the choice of the agents
who are to manage his property.
Therefore it is that the foundation of
the whole case must be laid in.the pro-
position that, in this state, where the
laws forbid the consolidation of COM
peting railroads, the owner of stock in
one such road has no right to buy or
own the stock of another. Unless the
bottom proposition can be successfully
maintained it is difficult to see where
or how any evidence of consolidation
or common control can be found in the
official proceedings of the directors or
executive managers if they do not
choose to put it on record. Between
two friendly boards of directors and
executive officials there is no necessity
of formal official action to bring about
all the substantial results of harmoni
GUS cooperation. Tacit understandings
between the representatives of COM
mon ownership are vastly more effec-
tive than written agreements between
the representatives of conflicting or
opposing interests.
eff Attorney General Douglas should
succeed in making good, to the salts
faction of the courts, the novel pro-
position that the owner of stock in a
railroad traversing this state has no
right to also own stock in competing
railroad, he will be entitled to the
credit of having made one of the most
important legal discoveries of the age.
1t is, of course, quite possible that
his intentions in this regard have been
Inexperienced. But if not, there is
a certain FEASIBILITY in the reasoning
in support of this radical thesis which
is sure to attract wide attention, and
the case when in the courts will be
watched with great interest