Evening star., 1902-01-07
RAILROAD COMBINE
Suit Filed Today in United States
Supreme Court.
NORTHERN SECURITIES CODEFENDANF
The State Of Minnesota the Com
plainant.
CA u Sc OF ITO n

"A U S E OF TION
Attorney General Wallace B. Douglas of
| Minnesota filed today in the United States
| Supreme Court the bill of complaint in the
case of the state of Minnesota, complain
| ant, against the Northern Securities Com
pany, defendant. 1t is a long document,
| about 10000 words, covering thirty-two
| pages of printed matter. The bill first
| points out the direct interest the state has
! in the proposed consolidation. 1t still owns
more than 100000 acres of public land,
valued at more than $15, 100000. and trav
ersed in part by the lines of the Great
Northern and Northern Pacific railroads.
If the merger is effected these roads will
cease to build spurs into these lands or
compete for their business The value of
| the lands will not increase as it has under
the spur of competition and the state will
lose in the taxable value of it's property
| The lands will not be opened for years
| and development will be arrested. 1t is
| next set up that the state eXpends more
| than $1O0,0OO annually in the operation and
| maintenance of it's educational, charitable
| and other public institutions; that this is
| mostly raised by direct taxation; that the
| amount which can be raised and the sue
ceSSful maintenance of these institutions
| for the benefit of it's citizens depend largely
| upon the value of the real and personal
| property within the state, which in turn
| depends largely upon free railroad competi-
| tion.
| 1t has been the settled policy of the state
| to encourage railroad building by grant
| of lands and in this way over 1O,5000OO
acres have been granted, nearly all OF
which has been granted to the Great North
| ern and Northern Pacific and their SUBJ
| sidiaries. The complainant alleges that
| the rates on the immense shipments of
| lines of the two companies have been low
| er than they will be under any arrange
ment which contemplates unity of control.
! The bill then recites the charters and
| corporations under which the Great North
| ern operates over 800 miles of road and
cites the cause in it's charter providing
| that it's affairs to be conducted by a
| board of directors which is to do all things
| necessary. land not inconsistent with the
Constitution and laws of the United States
or the laws of this territory or this act
| 1t is further alleged that James ]. Hill
| holds a controlling interest in the 125, 5,O00,
| 900 of capital stock.
History and Charters.
The history and charters of the North
| ern Pacific similarly rated, special
tention being paid TO the roads acquired
and built within the state. BY filing its
articles of incorporation in Wisconsin with
| the Minnesota authorities, the Northern
| Pacific became subject to all the laws, reg
| facts as to the present personnel directory.
| the insolvency of the old company and its
reorganization in 1893, and the purchase OF
the st. Paul and Duluth road in 1899 are
recited at length.
1t is set up that the lines of these two
systems are not only competitive between
points within Minnesota. but that they fur
Gsh the only competitive lines between
| Minnesota and Puget Sound, and have
furnished for eleven years They are also,
with one exception,t the only lines travers-
ing northern Minnesota. A paragraph is
devoted to the Burlington, and the facts
| as to the terms on which it's control was
| obtained by the two systems jointly, Chas.
| f. Perkins, it's former president and pres
| ent director, being director in the North
| ern Securities Company. The certificate of
| Incorporation of the latter filed in New Jer-
sey, November 49, 1901. is quoted in full
Northern Securities Company.
Taking up the Northern Securities Com
pany, it is set forth that it was organized
by ]. ]. Hill. W. P. Clough, ]. Pierpont
| Morgan and "other associates to the ora
trix unknown" who at the time were con-
tinually in conference over means by which
the laws of Minnesota might be successfully
| eVaded or avoided, and that it was
| ganized solely for the purpose of effecting
| consolidation of the Great Northern and
| Northern Pacific. The owners of large
| majority of the stock of the two systems
had agreed beforehand to transfer to the
new company 75 per cent of the stock of
the two systems en- terms which set
forth in full, and to retire the preferred
stock of the Northern Pacific. In further
ance of the plan tc evade the laws of Min
nesota, it agreed that pending the de-
| livery of the stock to the Northern Securi-
ties Company it should all be turned over
to James ]. Hill, or be under his control.
| The Northern Securities Company it is
| charged, does not intend to purchase this
stock, but simply to issue it's own stock
in exchange therefor. For these unlawful
purposes the company is about to receive,
unless enjoined therefrom, all the capital
stock Of the Great Northern and Northern
Pacific. This, it is claimed, is part of a
plan of Hill. Morgan and their associates,
whereby the two systems are to be consol-
dated and placed under the direction of
one man, or board of directors, through the
| defendant company and thus bring about
and perpetuate a monopoly in railway traf-
fic in Minnesota and a complete consolida-
tion of the two systems. One man or board
will thus, it is alleged. be enabled to fix all
rates on lines in the state, determine what
| trains shall be run, remove all competition
and prevent the building Of lines into new
country into competitive territory.
In Restraint of Trade.
This agreement and the consummation
thereof is claimed to be 'in restraint Of
trade, against public policy and void"
Under it's terms the directory of the North
ern Securities Company may change its
own rules or may delegate all it's authority
to an executive committee. 1t is pointed
out that HILL the president w. P. Clough,
the vice president, and E. T. Nichols, the
treasurer and secretary Of the company,
were all the date of its organization
officers of the Great Northern, and that
majority of it's directors were also directors
of the Northern Pacific. 1t has been the
settled policy Of the state to prohibit con-
solidation Of parallel or competing lines,
and the law of 1874 in which such probiti-
ton is made, is quoted in full, as well as
the ampifying act of 1881 and the anti
trust law Of 1S9a, prohibiting any combina-
ton in restrain of trade. 1t is set up that
the Northern Securities Company is a rail-
road corpora tiom within the meaning of the
| Minnesota laws and-that it's design is to
| evade escape and violate these laws in