Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-03-18

ST. LOUIS. Mo-. March 1S-The hearing
| of arguments in the anti-merger case Oh
| the United States government against the
| Northern Securities Company of New Jer-
sey began at 10 o'clock this morning in the
| United States court of appeals, before
Judges Sanborn, Caldwell, Thayer and
Vandevanter. Legal counsel for both sides
| arrived last night.
Judge Caldwell announced at the opening
| of court that the attorneys would not be
| limited as to time in the presentation OF
arguments.
James NJ. Beck, assistant attorney gen.
! eral, opened for the government.
Mr.. Beck's Argument.
| Mr.. Beck said in part:
1T would be difficult to exaggerate the
| Importance of this controversy. Few cases
have ever been presented to any court
| which affected corporate interests of such
| magnitude, and still fewer which more VI
| tally concern the welfare of the American
| people.
IF competing carriers can form a stable,
permanent and controlling combination
with indefinite and perpetual powers,
holding corporation organized under a
| state charter-a form which is far more in
| lmical to the public interests than the traf-
nc arrangements or technical trusts which
| the interstate commerce act of 1887 with
It's inhibition of pooling, and the act of july
2, 1871, with its sweeping condemnation OF
an comolnatlons In restraint of trade or at
tempted monopolfes, will be nullfed by the
power of individuals, who will thus show
the impotence of the declared will of the
American people,. Wv
torv % reg OK t6sn reviewed the corporate his
eoey VI tne GREAT Northern Northern Pa
cine and Union Pacific systems He 70
Ierred at length to- the attempt, which he
canned was made in the year 1893 by the
t Pacihc and Great Northern In
terests' 10 unite their respective systems
ana quoted at length from the decision of
the supreme Court in the case of PearsaIl
VS.. Great Northern Railway Company de-
claring the attempted amalgamation unlaw-
full. The failure of this first attemnt va G
the prelude and played a conspicuous part
IN the subsequent merger of 1901 He re-
rerred at length to the events which led
up to the acquisition of the Burlington sys-
TEN, and referred to Mr.. James j. Hill. J.
r. Morgan and E. H. Hartman as the
potential actors in this transaction, 1.-The
great triumvirate Of this colossal trans
continental combine He described the
notable contest between these financial
powers to control the Northern Pacific rail-
way, and through it the Burlington sys-
TEN, which eliminated in the panic of May
y, 1901, when Northern Pacific rose to
Sl,OO0 a share. He commended that after
this panic had shaken the equilibrium of
the financial world, the contestants entered
lHtO d OeIulte treaty OIL peace, whereby
Mr.. Morgan was not merely to control the
board of directors of the Northern Pacific
but all interests were to be harmonized I'M
der the community of interest" plan as
hnally developed into an Incorporated
unity of ownership plan.
Extraordinary Powers Conferred.
Mr.. Beck then analysed the charter OF
the Northern Securities Company and
said:
yet granted to a corporation unless it be
one of the New Jersey breed. In few
words, its powers may be classified as
follows:
"D Infinite in scope.
"(2) Perpetual in character
"(3) Vested in the hands Of few.
80 By methods secret even to stock
holders.
1T will be interesting to follow out the
possibilities Of such corporation. The
original idea of the holding corporation, as
explained by noted financers, is to enable
the minority to rule the majority
"a majority of the Northern Securities
Company, namely, $201, 600 600, controls the
Burlington, Northern Pacific and Great
Northern systems and all subsidiary COM
pan!es whose aggregate capitalization, in
Guiding funded debt, exceeds 81, OOO, OOO, O0O
but the board of directors whose holdings
Of Northern Securities may be compare
lively insignificant, can during the tenure
OF their office, appoint committee with
power to act and to use the seal of the
corporation at pleasure. This committee
may only be three in number, and a ma tor-
ity Is determinatve.
Thus, in the last analysis two men may
control the unlimited powers of the holding
company, which in turn controls the vast
powers OF the Burlington, Northern Pacific
and Great Northern companies and all sub
| ssdiary companies. When in the history of
corporate organization was there ever a
charter which concentered vast and i'm
q n hn how dc Afr g.
Mr. Beck contended that the boards Of
| directors of the Union Pacific, the North
ern Pacific, the Great Northern and Bur-
| lington systems had been 80 grouped that
| all motive and necessity for competition
| eliminated; that in this manner a working
combination had been effected which con-
| trolled the three transcontinental systems,
| otherwise competitive. whose total track
| age was over $4,000 miles.
Sherman Act Analysed.
He analysed the Sherman antitrust law,
and contended that it clearly prohibited
such a combination. He reviewed all of the
| decisions of the federal appellate court
| which had construed this act and summar-
| ICED the doctrine of these cases in the
| following propositions:
| 81. Public policy requires free competi-
ton between competing transportation lines
| and forbids all attempts to restrict such
80. The police power extends tG corpora
tions which are engaged in a public serv-
| ice, and which are therefore subject to
| legislative control, so far as becomes nee
essary for the protection Of the public in
| terests, and it is competent for the legfsla-
ture of a state. with respect to domestic
trade and Congress, with respect to inter-
state trade, to prohibit either corporations
| or individuals from combining, either d.
rectly or indirectly. as to eliminate
| competition.
IS. The purchase of stock by a railroad
corporation in a competing line Is con-
| trary to public policy and void, and this
| even though accomplished by individual
stockholders acting In behalf and for the
| interests of the purchasing company.
"a. Where the direct and necessary re-
| suit of given combination is to eliminate
| competition and thereby restrain trade,
the intent to accomplish that result will
be presumed and need not be formally
| proved.
80. 1t is not important that the proposed
| combination does not secure complete,
monopoly of a given subject of commerce
partial monopoly is equally offensive to
| public policy.
IS. The fact that the power of the com.
| hin tiop has not heen exercised TO fp,rao..