The Minneapolis journal., 1902-05-06
GOVT. IS ANSWERED.
Merger interests File Their Answer
in Federal Court.
PURPOSE OF THE No. SECURITIES
1T Is Explained at Length in the
Document-The "Higher
Competitton."

In addition to the legal points covered
IA the answer fled yesterday by the
Northern Securities company in the suit
against the railway merger brought by the
government, that company gives an ex-
tended explanation Of the purpose in
forming the Northern Securities company
! and why the purcha Sc of the Burlington
! system BY the Great Northern and North
erp Pacific was considered necessary This
follows the line of previous statements
made by Mr.. Hill on the witness stand
and In newspaper interviews. Oriental
trade, furnishing markets In the middle
| west for the products along the western
divisions Of the Great Northern and the
| Northern Pacific, and an independent coal
supply are factors discussed The con
| nections furnished by the Burlington were
deemed necessary to strengthen the Great
Northern and Northern Pacific In their
| competition with the Canadian Pacific to
| the north and the Union Pacific to the
! south. ,4 -, 1..E -; - - =, i"'... - .--'&
The point is made that the project of
a holding company such as the Northern
| Securities company was not the result
| in any way of the failure of the plan
| which was defeated by the supreme court
decision in the Pearsall case. The project
had it's inception years before that date.
| AS has been stated several times by Mr..
HILL several elderly men with large hold
ings in the Great Northern who wanted
ITO insure stability and a continuance Of
the present policy Of the Great Northern
company discussed such a plan as far back
as 1898. During these years and before
the plans of Great Northern stockholders
had been brought to final issue, several
Great Northern shareholders had become
| heavily interested in Northern Pacific and
for the same reason wanted that COM
pany's shares include in the holding COM
pany. T..
| The Raid on the n. p. :.s
The attempt: of the Union Pacific to Sc
cure control of the Northern Pacific and
| through that an equal voice in the Bur-
| llngton, altered the plans of the promot-
ers of the holding company. At the time
| Of the Burlington purchase it was not
| contemplated that an alliance between the
| Burlington and the two purchasing COM
panies the Northern Pacific and the Great
| Northern, was needed to preserve to each
company it's full share of the advantages
secured by the purchase. 1t was thought
that the manifest interest Of each com
pany rendered any further guaranty Of
security needless. But following this the
Union Pacific secured majority interest
| in Northern Pacific stock. Through pur-
chases by J. P. Morgan & Co., that con-
cern, Mr.. Hill and associates secured
majority Of the common stock.
The answer goes on to say:
| In view of the injury apprehended to both
| companies and to their shareholders and the
| better to protect their interests in the fu
| ture, the Great Northern shareholders hold
| ing Northern Pacific shares, deemed it ad-
| visable that the projected holding company
| should have power to purchase not only their
| own Great Northern and Northern Pacific
| shares, but also the shares of such other
| Great Northern and Northern Pacific share
| holders as might wish to sell their stock to
said holding company, and the shares. of
| companies already formed, and others that
| might be formed for the purpose Of aiding
| the traffic operations of the Great North
| ern and Northern Pacific companies .respec-
| lively. At this time it was not expected by
any of the persons concerned that any
| Northern Pacific shares except the said forty
two million dollars ($42,Ooo,0 ,00o) would be ac-
| quired by the proposed holding company. The
! organization of such company was not de-
| pendent any agreement that 1T should ac-
qure majority of the shares of either de-
fendant railway company. 1t would have
| been organized if the Burlington purchase
| had not been made, and If it's promoters had
had other shares to transfer to 1t than
the thirty four million dollars. (s34, 900 oo0}
Great Northern stock and the twenty mil
lion dollars 100000 OOO) Northern Pacific
stock, held by. them on May /, 1901. 1t
| was not known that all or how many Of
the shareholders of either of the railway
companies would be likely to transfer their
shares to this defendant when formed.
Acquisition of Northern Stocks. s
| After its organization, the Northern
Securities company purchased $3.50, ,000;0 900
| of Northern Pacific stock. 1t has also
! purchased and negotiated for the Great
| Northern stock as stated above. 1t Is
| asserted that neither the persons who
| organized it nor those concerned in its
! management or in any way connected wit h
it have planned or intended that the
stock of these railway companies should
be held, voted or used by 1t for the pur-
! pose of combining or consolidating the
roads or restraining competition between
| them. There has been no agreement be-
tween the stockholders and the company
| or between the stockholders and any
other corporation for the voting of their
stock for any common purpose or object.
There we're over 1900 stockholders In
the company and the ownership of shares
is changing daily. The persons concerned
in the formation of the company have
never controlled third of the amount
now outstanding. The securities company
is under no contract to acquire shares In
I either railway company. It's capital was
made large enough to acquire stock In
other corporations not common carriers,
which it might desire. It is held that
there was no intent and no results to
show that the right and privilege Of the
individual shareholders to vote in the
selection of boards of directors for each
road has been abridged. / : .s".--~- .