The Montgomery advertiser., 1902-05-06
REPLY OF THE MERGED
ANSWER OF THE NORTHERN
 SECURITIES COMPANY.
Denied That the Consummation of the Plant Will Diminish Com petition--Not Violative of
 Antitrust Law.

in aid of great competitive inter-
 state and international commerce" is the description of the Northern Securities Company given in an answer filed today
 in the United States Court by the attor- neys for that corporation in the suit
 brought by Attorney General Knox on be-
 half of the United States to enjoin the
 so-called merger of the Northern Pacific and Great Northern Railways.
 It is recited thef finstead of owning a majority of tke shares of the Great Northern or Ncl hern Pacific Company, l those who are tnterested in the organiza- | ton of the securities company did not own within $2S,O00U0o of majority of the | Great Northern shares and little more than one-quarter of the Northern Pacific
 shares. The Securities Company has ac- quired about five-twelfths of the Great
 Northern's stock. has negotiated for about i ifour-twelfths of the total of such stock. \ and has paid on account of the Great \ Northern and Northern Pacific shares purchased over $40.o00,0o0 in cash; that many stock holders have not and may not sell shares and that neither company | has solicited shareholders to sell to the
 securities company. | As to why the Chicago, Burlington and | Quincy was bought, the answer says both the Great Northern and the Northern I Pacific were placed at disadvantage with other trans-continental railroads as l well as with European competitors by the l want of sufficient direct connection with the territory offering the best markets | for the products of the country along | their lines and with the places Of produc- | tion and great centers of distribution rom | which their trafic must be supplied, The | lines of the Burlington, better than those | of any other company, fulfilled the re- | quirements of both roads in respect or markets for eastbound and freight for westbound traffic. The answer denies I the purpose was to lessen competition. | It is recited that the project of a hold | ing company had its inception in 1895 I when ten large share holders of the Great | Northern discussed what would be the effect of the company's policy should their holdings become scattered and by what means their holdings could be kept together. These same shareholders made I large purchases of Northern Pacific shares, individually without any >concert- cd action. and solely as investments. About May l. 1901. their holdings of Northern Pacific common stock amount cd to nearly twenty millions Of the i eighty million dollars common stock or the company which also had $i5,oOV.0vo of T preferred stock. At that time J. F. Nor l gan & Co.,, held about s6,000. 00o of the | common stock. In the fall of 1900. MT. I HilI and these Great Northern share ! holders discussed the question Of putting f their Northern Pacific stock into the pro posed holding company as well as the sus' gestion of giving the same right to other 1 Great Northern shareholders. The an- swer continues:
 | ..At the time of the purchase Of the l Burlington shares 1t was not contem- plated that any alliance between the pur- chasing companies or among their snare holders was needed to preserve 10 each company it's fair share of the advantages secured by the purchase. But parties | acting in the interest of the Union Pacinc Company system bought Northern Pacihc shares. both common and preferred, to inc amount of about SIS. .000,0 900. being a clear majority of the entire capital stock of that company. The apparent intent CT such purchase was to defeat the carrying out of the purposes for which the Bur lngton shares had been gotten by the | Great Northern and Northern Pacihc | companies which would have subordl-
 mated the policy of each to an interest adverse to both the Great Northern and Northern Pacific companies and 10 the
 public served by their lines"
 It was claimed that it was not at nrst
 expected that any Northern Pacific shares
 except the said s42, GOO 900 (being the com bined Morgan-Hill interest," would be ac- aured by the proposed holding company and the organization was not dependent on any agreement that it should acquire . | A ma iority of the shares of either defen- dant railway companies. It would have
 been organized if the Burlington purchase had not been made and if its promoters had had no other shares to transfer to it | Of Northern lstock and the s2OOO 900 of Northern Pacific stock held by them on May ], 1901. After its organization this defendant bought ana still holds $50 O0O0,000 of the stock Of the l Northern Pacific and it 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 to be held or used TOT the
 purpose of combining. consolidating or
 placing under one common management or control the railways of the Grea'
 Northern and Northern Pacific Compa- nies or the business thereof. or for the purpose of monopolizing or restraining
 competition between the said railway
 companies. or for any other purpose than the election by each of said railway
 companies of a competent and distinct | board of directors. able and intending tc manage each of them Independently of ] the other ana TOT lHt DSllchN OA e''S''
 shareholders and of the public" It Is
 stated that the persons who formed the
 securities company have never. altogeth- CT. owned. or controlled. so much as one- Il third of Its stock
 | It is further stated that the Securities Company was not formed for the purpose of restraining, trade or lessening com petition between the two railway com panies, nor would such, results follow from it's organization. Since the Securi- ties Company was formed. both lines have voluntarily so reduced rates as to decrease their earnings upwards of mil lion dollars annually.
 It. is maintained that the Securities Company Is not a railroad company and has no power to operate railways or con- trol rates or restrain traffic ana ooes not violate the antitrust act.
 The answer continues:
 "First--The antitrust act was not in- tended to prevent or defeat an enterprise in aid of Q great competitive interstate and international commerce merely be- cause such enterprise may carry with It
 the possibility of incidental restraint upon
 some commerce trifiing both as respects territory and volume
 "Second-Nor was the act intended to limit the power of the several States to create corporations. define their purposes. fix the amount of their capital and deter mine who may buy. own and sell their stock.
 "Third-Otherwise construed. the act l ho Tho