The herald-advance. (Milbank, S.D.) 1890-1922, 1902-05-16
OF THE
MERGER
Answer FILED In Y. 5. Circuit Court Gives Purpose
for which Company Was Formed and What 1t
Was Expected to Accomplishing Answer.

the lumber of the Pacific coast. They
reach Denver, Kansas City, Omaha and
Aurora, where are located the principal
smelters of silver-lead ores, such as are
mined near the lines Of the defendant
railway companies.
They reach Omaha, Kansas City and
Chicago. where are the great packing
houses and the great markets for the
cattle and sheep Of the ranges of North
Dakota. Montana, wyoming, Idaho, Ore
gon and Washington.
They reach st. Louis n Kansas City.
connecting them with lines traversing
the cotton states, from which come ray
and manufactured cotton required for
shipment to China and Japan.
At Chicago and st. Louis they on
meet with the line which reach the
points of supply of manufactured iron.
steel, machinery and other. manufactured
articles that Inc a market in Japan and
China.
Reaches Coal supply.
The Burlington line southwark from
Minneapolis and st. Pau along the Mis-
sissippi river reaches the great coal dep
osits Of Southern Illinois. the largest
west of Pennsylvania and West Vir-
ginia; and its light gradients and con-
sequent low cost OF transportation make
it possible to supply such coal to points
on the lines of each defendant railway
CoHlpdHy east Oh the missouri river, re-
lieving the people and the railways of
that territory from entire dependence
upon the Pennsylvania and West Vir-
GINA mines, the supply from which is
yearly becoming most costly n less
certain.
The price paid for said Burlington
stock was lower per mile Of main track
covered by the stock than that for
which the stock of any other large and
well established system, in the same
general territory. could then rave been
bought.
The purchase OF the Burlington stock
by the Northern Pacific and Great
Northern companies in equal parts
served each company as well as II it
were the sole owner Of such stock, while
such purchase might have been beyond
the financial means of either company by
itself.
The Great Northern and Northern Pa
ciic companies therefore each purchased
an equal number of shares of the Bur-
lington stock as the best means and for
the sole purpose Of reaching the best
markets for the products of the territory
along their lines, and of securing connec-
lions which would furnish the. largest
amount of traffic for their respective
roads, increase the trade and interchange
OF commodities between the regions ira
versed by the Burlington line and their
connections and the regions traversed or
reached by the Great Northern and
Northern Pacific lines, and by their con-
recting lines of shipping on the Pacific
coast. These connections and such in
~terchange of rattle were deemed to be,
and are, indispensable to the maintenance
of their business, local as well as inter-
state, and to the development OF the
country served by their respective lines,
and of like advantage to the Burlington
lines and the country served by them,
and strengthen each ompany in the COM
pc ition with the more southerly lines to
the Pacific coast, with the Canadian Pa
i1c railway and with European carriers,
for the trade and commerce Of the Orient.
In such purchase there was no purpose
to lessen any competition Of the Burling-
ton lines with those Of either of the pur-
chasers, for they are not competitive, or
to lessen any competition between the
purchasers. Such purchase was not in
tended toha We. and 1t cannot have, my
such effect.
The purchase of the Burlington stock
was not made In view of the formation
Of this defendant, but solely from the
motives and with the purposes already
stated.
Origin of Holding Company.
The project Of forming a holding COM
pany of any kind was not the result, in
any way. of the failure Of the plan which
was defeated by the decision OF the SUI
preme court In the Pearsall case. There
was no connection whatever between the
two.
The project Of a holding company which
finally developed into the formation of
this defendant had its inception years be-
fore that date, among several gentlemen,
not exceeding ten in number. who had
been large shareholders in the Great
Northern company and its predecessor,
the st. Paul, Minneapolis n Manitoba
Railway company; some Of them from the
original company in 1879. and others from
dates not long after that time. They have
never held a majority Of the stock Of the
Great Northern company, but have taken
an active interest in it's policy and admin
istration; have aided it when necessary in
financing it's operations; a acted to-
gether in promoting its interests; have,
with some exceptions, served from time to
time as directors and officers (Mr. Hill
having been president of the successive
companies since 1882; and by reason of
their active interest in the company and
services to 1t, ave Influenced, to a large
degree, it's policy and management. AS
far back as 1893, most of these gentlemen
being well advanced. and some far ad-
vanced. in years, they began to discuss
together what would be the effect upon
the policy, which under their influence the
COIlpdAy udu PuASuOA ~ iCa JAG
to it's shareholders and the public. should
their holdings by death or otherwise be-
come 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. 1t was
considered that IL a company should be
formed to which they might transfer their
individual holdings, their shares were
likely to be held together. SO long as the
majority in the holding company should
so wish, and this would tend to give
stability to the policy Of the Great North
ern company, be of aid to 1t in n
operations, and maintain the value OF
their investments. These conclusions were
the result Of various consultations among
the persons mentioned, or some of them,
but no definite agreement was made for
forming such a company or binding any
one to transfer his shares to 1t II formed.
From time to time, beginning with the
reorganization of the Northern Pacific
company In 1896, Mr.. Hill and said other
Great Northern shareholders who had
discussed with him the plan OF forming a
holding company, had made large pur-
chases Of Great Northern shares. individ-
ually, each for himself without n con-
certed action. and solely as Investments.
About May 1, 1901, their aggregate hold
- ~. o-~or 0tork If the N0r1hs