The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1903-03-18
Strong Bench Sits in st. Louis
to Hear Arguments
In the Case of the Government
VS.. the Merger.
TINE is UNLIMITED.
James NJ. Beck, Assistant Z. s.
Attorney General,
Opens the Case With an Elabo-
rate Presentation.

ST. Louis, Mo. March 1S-The hearing
Of the arguments in the anti-merger
case Of the United States government
against the Northern Securities COM
pany Of New Jersey began at 10 o'clock
this morning in the United States court
of appeals before Judges Sanborn, Cald-
well. Thayer and Van Deventer. Legal
counsel fer both sides arrived last night.
Judge Caldwell announced at the
opening &C the court that the attorneys
would not be limited as to time in the
/ presentation OF arguments
James NJ Seek. assistant attorney
general, opened for the government. An
abstract OF his argument follows:
1t would be difficult to minimize 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 vitality concern the welfare of the
American people
If connecting carriers can form q
stable. permanent and controlling COM
! bination with indefinite and perpetual
powers. through the simple device OF a
/ sO-called holding corporation organized
under a state chaTter-a form which Is
far more inimical to the public interests
than the traffic arrangements or tech
meal trusts which the law has hitherto
condemned-then both the interstate
commerce act of 1887 Withsits inhibition
of pooling, and the act of July , 1896
with its sweeping condemnation of all
4 combinations in restraint of trade or at
I tempted mcnopolies, will be nullified by
! the power of individuals, who Will thus
show the impotence of the declared will
I of tie American people"
Mr.. Beck then reviewed the corporate
4 history Of the Great Northern Northern
Pacific. and Union Pacific systems. He
J relerFeu at length TO the attempt which
/ he GAINED was made in the year 1895
/ by the Northern Pacific and Great
4 Northern interests to unite their re-
spectiye systems, and quoted at length
from the decision of the supreme court
in the case of Pearsall VS.. Great North
erE Railway company declaring the at
/ tempted amalgamaticn unlawful The
failure of this first attempt was the pre-
Jude and played conspicuous part il,
+ the subsequent merger of 1901. He re-
ferred a length to the events which lea
up to the acquisition of the Burlington
system. and referred to Mr.. James }.
I Hill, j. p. Morgan, and E. II. Hartman
as the potential actors in this transac-
I ton, the great triumvirate of this
! colossal transcOntnental combine" He
! described the notable contest between
/ these financial powers to control the
Northern Pacific railway, and through
1 II the Burlington system, which culmi~
ndUed IN the panic of May 9, 1901, when
/ Northern Pacific rose to 81 600 a share
] He contended that after this panic hac
shaken the equilibrium of the financial
! Wcr4dt the contestants entered into u
QeHnlIe treaty Of peace. whereby Nj
/ Morgan was not merely to control the
board Of directors of the Northern Pa
cine. but all interests were to be har-
! monized under the community of inter-
est plan as finally developed into an
/ incorporated unity of ownership" plan,
There was considerable discussion as
+ to what charter could be secured to pro.
tect such extraordinary powers. After
1 careful consideration by eminent coun.
sci It was finally decided that the state
! which had Won a bad pre- minence for
It's reckless sale Of corporate privileges
/ to secure petty fees, was the state whOse
| protective power should be invoked
Z Accordingly, the charter was applied for
( in New Jersey on November 13 1901
The whole transaction was nothing
more than the exchange of certificates
Of Ownership the buyers were the SELL
ers and the sellers were the buyers WITH
this Important difference, that the part
owner OF the property of the Northern
Pacific railway, or the Great Northern.
found himself q part owner of the prop
erty Of both Had the two constituent
companies formally consolidated. no
different results would have been ac-
complished- Had the Great Northern
and Northern Pacific formally merged
4 their corporate identity and issued new
capital stock in retirement and ex-
change Tor the pre-existing holdings, the
result would have been precisely the
same as in the exchange for the certifl,
Gates Of the Northern Securities. with
the single exception OF the name. BE
tween a technical merger and transfer
to the so-called holding company is the
difference between tweedle-dum and
tweedle-dee.
Mr.. Beck then analysed the charter
Of the Northern Securities company, and
said:
Such extraordinary powers were new
er yet granted to a corporation unless it
be one of the New Jersey breed. In a
few words, its powers may be classified
I'D Infinite in scope.
20 Perpetual in character
90 Vested in the hands of a few.
holders
1t viii be interesting to follow out
the possibilities Of such a CORPORA ton
The original idea of the holding corpora
ton. as explained by noted hnanciers
jority.
a majority of the Northern. .Securi-
ties company, namely, S201 600, 600 con-
trols the Burlington. Northern Pacific.
and Great Northern system and all sub
sidiary companies whose aggregate cap
italizatiou. including funded debt ex-
ceeds 81 COO 600 coo. but the board Of di-
rectoFs, whose holdings of Northern Sc
cuIities may be comparatively insight
icant can, during the tenure of their Of
flee, appoint a committee with power to
act and to use the seal of the corpora
ton at pleasure. This committee may
only be three in number. and a major
ity IS determinative. Thus, in the last
analysis TWO men may control the I'M
limited powers of the holding company.
which in turn controls the vast powers
of the Burlington. Northern Pacific and
Great Northern cOmGanfes and all sub
sidiary companies When in the history
of corporate organization was there
ever charter which concentered vast
and immeasurable power in the hands of
so feW?"
Mr.. Beck contended that the boards of
directors Of the Union Pacific. the