The age-herald., 1902-05-06
Attorneys So Describe Object of
 Great Railroad Merger
LENGTHY ANSWER 10 BILL
Chicago, Burlington and Quincy Was Bought Because the Two Great Systems Were Placed at
 Great Disadvantage.

Ot. Haul MlIlIl., May D. All enterprise in aid of great competitive interstate and international commerce" is the de- scription of the Northern Securities given in answer filed today in the United States court by the attorneys for that corpora tion in the suit brought by Attorney General Knox on behalf of the United States to enjoin the so-called m erger of the Northern Pacific and Great Northern railways. It Is recited that instead of owning a majority of the shares of the Great Northern or Northern Pacific com panies, 1t is stated that those who are interested in the organization of the se- curities company did not own within S26 GOO of a majority of the Great Northern shares. The securities company has acquired about five-twelfths of the Great Northern's stock, has negotiated for about four-twelfths of the total of such stock and has paid on account of the Great Northern and Northern Pacific shares purchased over $40, 0Oo,O 900 in cash that many stockholders have not and may not sell shares and that neither company has solicited shareholders to sell
 
 Were at a Disadvantage.
 As to why the Chicago, Burlington and Quincy was bought, the answer says both the Great Northern and the Northern Pacific were placed at disadvantage with other trans-continental railroads, as well as with European competitors by the want of sufficient connections with the territory offering the best markets Tor the products of the country along their lines and with the places of production and great centers of distribution from which their traffic must be supplied The lines of the Burlington, better than those of any other company fulfilled the re- quirements of both roads in respect of markets for east bound and freight for west bound traffic. The answer denies the purpose was to lessen competition.
 It is recited that the project of hold ing company had it's inception in 1893 when ten large shareholders of the Great Northern discussed what would be the effect of the companys policy should their holdings become scattered and by what means their holdings could be kept
 
 large purchases of Northern Pacific shares individually without any concert ed action and solely as investments. About May 1, 1901, their holdings of Northern Pacific common stock amounted to nearly s2o,0O00OO of the $50, OO0,0oO com mon stock of the company, which also had $75, 900, ,0OO of preferred stock. At that time J. P. Morgan x Co. held about $6. 100000 of the common stock. In the fall of 1900 Mr. Hill and the Great Northern shareholders discussed the question of putting their Northern Pacific stock into the proposed holding company, as well IS the suggestion of giving the same right to other Great Northern shareholders. The answer continues:
 No Alliance Was Needed.
 "At the time of the purchase of the Burlington shares 1t was not contemplat- ed tha. any alliance between the purchas- ing companies or among their sharehoid- CTS was needed to preserve to each com pany its fair share of the advantages se- cured by the purchase. But parties act ing in the interest of the Union Pacific Company system bought Northern Pacific shares, both common and preferred, to the amount of about $7S,0O0,00O. being clear majority of the entire capital stock of that company. The apparent intent or that purchase was to defeat the carrying out of the purposes for which the Bur lington shares had been got by the Great Northern and Northern Pacific compan- ies. which would have subordinated the policy of each to an interest adverse 10 both the Great Northern and Northern Pacific companies and to the puDhc served by their lines.'
 It Is claimed it was not at nrst eA- pected that any Northern Pacinc shares except the said $42. GOO (being the com bined Morgan-IJill interest," would be ac- ouired by the proposed holding com pany and the organization was not de- pendent on any agreement that 1t shouio acquire a majority of the snares ol either defendant railway company. u would have been organized II the Dur lington purchase had not been made anu if it's promoters had had no other shares to transfer to it than the th1rty-Iour million dollars of the Great Northern stock and the 20, 900 900 of Northern Pacl- fc stock held by them on May, 1901 Ar ter it's organization this defendant bought ans still holds $l50 900, 900 of the stock or the Northern Pacific and 1t has also pur- chased and negotiated for the purchase of the stock of the Great Northern Com pany. It is denied that any stock thus secured IS 10 De nelo or uSeu TUT lhS purpose of combining, consolidating or placing under one common management or control the railways of the Great Northern and Northern Pacific companies or the business thereof: or for the pur- pose of monopolzing restraining com petition between the said railway com panies; or for any purpose than the cleo tion by each of said railway companies of a competent and distinct board of directors, able and intending to manage each of them independently of the oth- CT and for the benefit of their sharehold- CTS and of the public"
 It Is stated that the persons who formed the securities company have never, all together, owned or controlled so much as one-third of its stock"
 Not to Restrain Trade.
 It is further stated that the securities company was not formed for the pur- pose of restraining trade or lessening competition between the two railway companies, nor would such results fol- low from its organization. Since the se- curities company was formed, both lines have voluntarily so reduced rates as to decrease their earnings upwards Of million dollars annually. It Is claimed that for all interstate commerce, the rates are fixed by joint tariffs with con- meeting lines and stated further that Tin respect to all such traffic, neither of the defendant companies has ever had, or can have, any independent rate mak-