The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1902-05-06
WHY THE LINES
WERE MERGED


stock by the Northern Pacific and
Great Northern companies in equal
parts served each company as well as
II IL were the sole owner of such stock,
WINE such purchase might have been
I beyond the financial means Of either
company of itself
The Great Northern and Northern
racine companies. therefore. each pur-
/ chased an equal amount of shares of
the Burlington stock as the best means
and Tor the sole purpose Of reaching
me best markets in the territory along
thelF lines, and Of securing connections
which would furnish the largest
amount Of traffic for their respective
/ roads, increase the trade and inter
change Of commodities between the re-
sions traversed by the Burlington lines
and their connections. and the regions
traFefsed or reached by the Great
Northern or Northern. Pacific lines and
I by their connecting lines of shipping on
/ the Pacific coast
/ II is claimed that such interchange
OF traffic is indispensable to the main
Jenance of their business and to the
/ development of the country served, and
that in such purchases there was no
/ proposition to lessen any competing of
/ the Burlington lines with those of
/ either Of the purchasers, for they are
not competitive, or TO lessen any COM
+ petition between the purchasers
Ancient Dream Fructifed.
And, further, the purchase of the
/ Burlington stock was not made in view
/ OK the formation of this defendant. but
| solely from the motives and with the
! purposes already stated"
/ The history Of the formation of the
/ holding company is given very fully,
! the project having its inception many
/ years prior to the decision of the SUI
/ preme court in the Pearsall ca Sc. which
i has been alleged to be the reason for
the organization of the holding COM
/ pany. There the large shareholders in
/ the Great Northern and its predecessor,
{ the st. Paul, Minneapolis & Manitoba
! Railway company. as far back as 1898,
\ began to discuss. together what would
/ be the erect upon the companys policy
should their holdings become scattered.
/ and by what means their holdings
! could be kept together. so as to secure
| the continuance of such policy in the
management Of the company.
The idea Of a holding company re-
\ suited, but no definite agreement was
/ made. These same Great Northern
! shareholders, from time to time. after
! the reorganization of the Northern Pa
] =
/ of Northern Pacific shares individual
/ ~ without any concerted action, and
/ solely as investments. About May l,
! 1901, their aggregated holdings Of
I Northern Pacific common stock
/ amounted to nearly $40 O00 900 Of the
! $50, 900 of common stock of the COM
pany, which also had $4,000 of preferred
stock.
At that time J. Pierpont Morgan &
/ Co. held about $4,000 of the common
/ stock. In the fall of 1900 Mr.. Hin and
/ these Great Northern shareholders dis
1 Cussed the question Of putting their
/ Great Northern stock in the proposed
I holding company, as well as the ques-
| ton Of giving the same right to the
/ other Great Northern stockholders.
Union Pacific Hostility.
The answer then continues. AT the
4 time of the purchase of the Burlington
1 shares it was not contemplated by
1 either the purchasing company or it's
/ shareholders that any alliance between
4 the purchaser companies or among
I their sharehOlTers was needed to pre-
serve to each company its fair share
/ of the advantages secured by the pur-
/ chase. 1t was thought that the mani
/ TEST interest Of each company rendered
/ any further guaranty or security need
]
+ less. But, pending. or just after the
! conclusion of the negotiations for the
[ Burlington stock, parties acting in the
! interest Of the Union Pacific railway
! system did buy Northern Pacific
/ shares, both common and preferred. Ia
the amount Of about SIS 600, 900, being a
clear majority Of the entire capital
/ stock Of that company.
! The apparent intent of such pur-
To cscr,r Al
! it would have defeated, the carrying
! out Of the purposes for which the Bur
I lingtOn shares had been bought by the
/ Great Northern and Northern Pacific
{ and the development Of the interstate
/ and international commerce of the
] country and would have subordinated
/ the policy Of each road 10 an interest
/ adverse to both the Great Northern
/ and the Northern Pacific companies
1 and to the public served by their lines.
/ Next are recited the conferences with
/ j. PierpOnt Morgan over the proposed
/ holding company as a means of pro-
( tecting all interests, and it is added
4 AT this time il was not expected
/ by any Of the persons concerned that
/ any Northern Pacific shares, except the
/ said $42,000,OOO (being the combined
t Morgan-Hill interesD, was being ac-
/ quired by the proposed holding COM
/ pany.
No Dependent Agreement.
The organization of such company
! was not dependent upon any agreement
( that it should acquire a majority of
} the shares of either defendant railroad
| company. 1t would have been organ
4 lied If the Burlington purchase had
1 not been made and if its promoters had
I had no other shares to transfer TO it
than the S34. 000. 600 Of Great Northern
stock and the S2O,OOO,OOO of Northern
! Pacific stock held by them on May I,
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 defend
ant when formed. After its organiza-
/ ton this defendant bought and still
I holds S150,000000 of the stock of the
/ Northern Pacific Railway company and
( it has also purchased and negotiated
/ for the purchase of the stock of the
/ Great Northern Railway company, as
/ hereinbefore stated.
/ 1t is denied specifically and generally
! that any stock thus secured is TO be
held or used for the purpose Of COM
I bining. consolidating or placing under
/ one common management or control
/ the railways of the Great Northern and
/ Northern Pacific companies or the
business therefor; for the purpose Of
/ mOnopolizing or restraining compete
/ ton between the said railway cOmpan-
les; or for any other purpose than the
/ election by each Of said railway COM
l panies of a competent and distinct
board of directors. able and intending
! to manage each of them independently
I Of the other, and for the benefit Of
{ their shareholders and Of the public s"
1t is said that every share of stock
1 issued is in good faith for value re-
! ceived and in accordance with law;
that no agreement limiting or con-