The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-03-11
United states Court to Decide whether
the Northern Securities Conn
pany Is n Trust.
MAIN POINTS OF THE BILL
PETITION FOR AN INJUNCTION
AGAINST j. j. HILLS ROADS,
Which Are, According to the Com
plant, Violating the Sher-
man Antitrust Act.


States a bill was filed here to-day in the
Circuit Court for the district of Minnesota
in the case of the United States, COM
plainant, against the Northern Securities
Company. the Great Northern Railway
Company, the Northern Pacific Railway
Company and Others, defendants, to test
the legality Of the alleged combination or
merger of the two roads and others named
in the bill. The action is brought under
the act of July 2. 1890, known as the Sher-
man antitrust act.
After r%eciting the facts that the North
ern Securities Company is a corporation
organized under the laws of the State of
New Jersey; that the Great Northern Rail-
way Company was organized under the
laws of the State Of Minnesota. and the
Northern Pacific Railway Company under
the laws of Wisconsin, and that the two
last-named companies are common carriers,
doing an interstate business, and that these
corporations at and prior to the merger
complained of owned and operated two
separate, Independent, parallel and com
peting lines of railroad aggregating over
$500 miles in length, the petition goes on
to say that they were the only transcon-
tinental lines of railway extending across
the northern tier of States west Of the
great lakes, from the great lakes and the
Mississippi river TO the Pacific ocean, and
were then engaged in active competition
with one another for freight and passenger
traffic among the several States of the
United States, and between such States
and foreign countries, each system con-
Meeting at its eastern terminals, not only
with lines of railway, but with lake and
river steamers to other States and to for
eign countries, and at its western termi-
nails by sea-going vessels to other States,
Territories and possessions of the United
States and to foreign countries.
THAT prior to the year 1898 the Northern
Pacific was owned and operated by the
Northern Pacific Railroad Company, a cor
poration organized under certain acts of
Congress-; that during that year the COM
pany became lnsOlvent, and was placed in
the hands OF a receiver. While III this con-
dition, awaiting foreclosure and sale, an
arrangement was entered into between a
majority of the bOndholders of the North
ern Pacific Railroad Company and the
Great Northern Railway Company for a
virtual consolidation of the two. placing
the control of the Northern Pacific system
in the hands of the Great Northern. This
arrangement contemplated the sale under
foreclosure of the Northern Pacific Com
pany TO a committee of bondhOlders, who
SlOUIQ organize q new corporation 10 De
known as the Northern Pacific Railway
Company One-half of the capital stock of
the new company was turned over to the
Great Northern, which in turn was TO guar
antee the bonds of the Northern Pacific
Railway Company.
FIRST MERGER DEFEATED.
1.-The carrying out of this arrangement"
says the petition, was defeated by the de-
cision of the United States Supreme Court
in the case of PearsalI VS.. The Great North
ern Railroad Company, which was decided
on March 30. 1896, in which it was held that
the practical effect would be the consolida-
ton of the two parallel and competing lines
of railway and the giving to the defendant,
the Great Northern Railway Company, a
monopoly of all traffic in the northern half
of the State of Minnesota, as well as Of
all tr~anscOntinental traffic north of the
line of the Union Pacific, TO the detriment
of the public and in violation Of the laws
Of the State Of Minnesota.
Early in the year 1901 the defendants,
the Great Northern and Northern Pacific
Railway companies, in contemplation of the
Ultimate placing of the Great Northern
and Northern Pacific systems under a COM
mon source of control. united in the pur-
chase of the total capital stock of the
Chicago, Burlington & Quincy Railroad
Company of Illinois, giving the joint bonds
of the Great Northern and Northern Pa
cifc Railway companies.
I'm this manner the Great Northern and
Northern Pacific Railway companies Sc
cured the control of the vast system Of
lines known as the Burlington system,
about 5000 miles in length. The attempt
10 turn over a controlling interest of the
Northern Pacific Railway Company to the
Great Northern, having thus, in 1896, been
defeated by a decision of the Supreme
Court. the defendants, James j. Hill and
his associate stockholders of the Great
Northern, owning or controlling a major
ity of its stock, and the defendants, J..
Pierpont Morgan and his associates, own
ing or controlling a majority of the stock
of the Northern Pacific, " . entered
into an unlawful combination or
conspiracy to effect a virtual con-
and Great Northern systems and TO
place restraint upon all competitive in
terstate and foreign trade or commerce
carried on by them. and to monopolize
or attempt to monopOlize the same, and to
suppress the competition heretofore exist
ing between said railway system in said
interstate and foreign trade or commerce,
through the nstTumentalfty and by the
means following. tO-wit: "A holding cOrpOr-
alton. to be called the Northern Securities
Company, was to be formed under the
laws of New Jersey with a capital of $4O0,
000.O0 TO which. in exchange for its own
capital stock upon a certain basis and at
a certain rate. was to be turned over and
transferred the capital stock. or a control
ling interest in the capital stock Of each
of the defendant railway companies. : .
I'm this manner the individual stock
holders OF these Two independent ana COM
peting railway companies were to be elm
mated and a single common stakeholder.
the Northern Securities Company. was to
be substituted; the interest of the individ-
ual stockholders In the propert and fran
chises of the two railway companies was to
terminate, being thus converted into an in
terest in the property and franchises OF
the Northern Securities Company. The in
dividual stockholders of the Northern Pa
cifc Railway Company were no longer to
hold an interest in the property or draw
their dividends from the earnings of the
Northern Pacific system. and the individual
stockholders OF the Great Northern Rail
way Company were no longer TO hold an in
terest in the property or draw their divi-
dends from the earnings OF the Great
Northern system. but having ceased TO be
stockholders i'm the railway companies. and
having become stockholders in the holding
bends from the earnings of both systems.
collected and distributed by the holding
corporation.
KILLING COMPETITION.
'In this manner by making the stock
holders of each system Jointly interested
in both systems. and by practically pooling
the earnings of both systems for the benefit
of the former stockholders of each. and by
vesting the selection of the directors and
officers OF each system in a common body,
10 wit: the holding corporation. with not
only the power but duty TO pursue a policy
which would promote the interests, not OF
one system at the expense OF the others,
but OF both at the expense of the public,
all inducement for competition between the
two systems was TO be removed. a virtual