The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1902-03-11
UNDER THE SHERMAN ACT
Merger Declared to be Scheme to
Stife Competition.
ACCOUNT OF STEPS IN THE SCHEME
If This Conspiracy Succeeds All the Railway
Systems May be Consolidated and the
Public Placed at Corpora
TONS Mercy.
By the Associated Press J

st. Paul, Mimi, March 10.-By direc-
tion of the Attorney General of the
United States, bill in equity was filed
here today in the Circuit Court of the
United States for the district of Mime
sofa in the case of the United States,
complainant, against the Northern Sc
curities Railway Company, the North
ern Pacific Railway Company and 9TH
ers, 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 Sherman anti
trust act.
After reciting the fact as to the Or
ganization of theyNorthern Securities
Company, the Great Northern Railroad
and the NorthErn Pacific Railway the
petition goes on to say that they "Werc
the only trans continental lines of rail
way extending across the northern tier
of States vets of the Great Lakes, from
the Great Lakes and the Mississippi
River to the Pacific ocean, and We're then
engaged in active competition with one
another for freight and passenger traf-
fic''
The Northern Pacific Railroad Com
pary, it is recited, became insolvent in
1898 and was placed in the hands of
receiver While in this condition an ar
rangement was entered into between
majority Of the bond holders of the
Northern Pacific Railroad COMPANY aud
the Great Northern Company for a vir-
tual consolidation of the two, and plac-
ing the control of the Northern Pacific
Company in the hands of the Great
Northern This arrangement contem-
plated the sage under foreclosure of the
Northern Pacific Railroad Company to
a committee of bondholders, and that the
Great Northern Company should guar
antee the bonds of the Northern Pacific
Railway Company in return for one half
of the stock of the Northern Pacific
Company.
1.-The carrying out of this arrange
ment," says the petition, ''was defeated
by the decision Of the United States Su-
preme Court in the case of PearsalI
against the Great Northern Railway
Company in 1896 in which it was held
that the practical effect would be the
consolidation of the two parallel and
competing lines of railway and the Civ
ing to the defendant the Great Northern
Railway Company, monopoly of all
traffic in the northern half Of the State
of Minnesota as we'll as of all trans
continental traffic north of the lines Of
the Union Pacific. The fact of the joint
purchase by the Great Northern and
Northern Pacific systems of the Chicago,
Burlington and Quincy Railway Com
pany, with it's 5000 miles of track is next
recitcd, and it is then charged that
James ]. Hill and his assistants of the
Great Northern and PierpOnt Morgan
and his assistants of the Northern Pa
cific entered into an unlawful combina
tion or conspiracy to effect a virtual
consolidation of the Northern Pacific and
Great Northern systems, and to place re-
straint upon all competitive inter- state
and foreign trade or commerce carried
on by them, and to monopolize or at
tempt to monopoliZe the same and to
suppress the competition heretofore eX-
listing between said railway systems in
said Interstate and foreign trade or
commerce, through the instrumentality
of a holding corporation, to be called
the Northern Securities Company, 10
which, in exchange for its own capital
stock was to be turned over and trans
ferred the capital stock, or a controll
ing interest in the capital stock of each
of the defendant railway companies
In this manner the petition says the
individual stockholders of 6hese two in
dependent and competing railway com
panies were to be eliminated and single
common stockholder, the Northern Sc
curities Company, was to be substituted.
In this manner, by making the stock
holders of each system jointly interested
in both systems and by practically pool
ing 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, to wit: the holding
corporation, with not only the power but
the duty to pursue a policy which would
promote the interests, not of one system
at the expense of the other, but of both
at the expense of the public, all induce
ment for competition between the two
systems, was to be removed, a virtual
consolidation effected and a monopoly of
the State and foreign commerce
formerly carried on by the two systems
as independent competitors established.
The petition next recites in further pur-
suance of the unlawful combination or