The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1903-08-07
MINNESOTA LOSES SUIT.
Judge Lochren Decides That the Northern Securities
Company is Legal Organization.
Consolidate Northern
Northern Pacific ads--Tex o Decision.

MT Hill and the stockholders referred
to OF the Great Northern company were
likewise alarmed by such attempt in the
interest of the Union Pacific company to
obtain control of the Northern Pacific
and through it Of the Burlington system;
result which they apprehended would
lnJuriously affect the property of the
Great Northern railroad, and the country
traversed by it and by the Northern Pa
cinc railroad. And in the project OF eS-
tablishing a holding company to pur-
chase and hold a majority of the stock of
the Northern Pacific company they joined
for the purpose of selling to such holding
company and placing therein their own
stock in the Great Northern company and
permitting all other stockholders of the
likewise, and thus accomplish their pur-
pose above stated of giving permanency
to the management and policy of the
Great Northern company.
Not Done by Companies.
THE Incorporation of the Northern Sc
curities company under the general laws
of New Jersey and with a capital of
$500 900, OOO was completed Nov. is, 1901,
Neither the Great Northern company nor
the Northern Pacific company, by any
act OF ITS directors, or any corporate.
subsequent action of the Northern Sc
curities company; but Mr.. Morgan, Mr..
Hill and other stockholders of the North
company, were individually the promoters
who caused and procured the incorpora-
ton of the Northern Securities company
for the purposes above stated.
The Northern Securities company
when formed offered and agreed to pur-
chase and to pay for in It's own stock at
par (S1O0 per share) any stock of the
Northern Pacific company at the price of
Sis per share and any stock of the Great
Northern company at the price Of $3.50
stock of said two railroads were at such
rates and so paid for, purchased from
said promoters and other stockholders
Of said two railroad companies by said
Northern Securities company.
About the same time Mr.. Hartman
and his associates sold to ]. p Morgan
& Co. all the Northern Pacific company
said-both common and preferred
amounting to more than SIS, 900, 900, and
said j. P. Morgan & Co. at the same
time sold al the same stock to the North
consideration therefor directly to Mr..
Hartman and his associates; a part of
such consideration being something more
than So, 100000 of the stock of said
Northern Securities company That pur-
chase was completed on Nov. IS, 1901.
ION Jan. l, 1902, the Northern Pacific
company paid off and retired it's preferred
stock. having raised the money for that
purpose by an issue of bonds. which Were
made convertible, and were converted
into common stock of that company. 9th
er stockholders Of each Of said two rail-
road companies sold their stock to the
Northern Securities company receiving
in payment or exchange therefor, at the
rates aforesaid, stock of the last named
company so that by Dec. l. 1901, said
Northern Securities company had become
the owner of considerable more than
majority of the stock Of the Northern
Pacific company, and a large amount, but
less than majority of the stock of the
Great Northern company. Similar pur-
chases from stockholders continued, and
at the time of the commencement Of this
suit the Northern Securities company had
become and still Is the owner of about
SO per cent Of all the stock of the North
ern Pacific company and of about 76 per
cent of all the stock of the Great North
ern company.
Conclusions Of Law.
"First-It is obvious from the fore
ging facts that the Northern Securities
company was incorporated with the pur-
pose and intent on the part of it's pro-
motors that 1T should acquire by purchase,
by exchange for its stock, and should
own and control a considerable majority
of all the stock of the Northern Pacific
company, and thus secure that company
against the danger of any future raid
upon it's stock which might place it's man.
agement and the resulting control of the
Burlington system in the power of any
rival railroad corporation, whose interests
might be hostile to the development and
property of the Northern Pacific and
Great Northern companies, and their sea.
country traVersed by their railroad sys-
TENS.
This was the aVoWed purpose or Mr..
Morgan and his associates who acted
with him in this matter. including Mr..
Hill and other large stockholders of the
Great Northern company, who also held
large amounts of stock in the Northern
Pacific company and We're apprehensive
that any hostile control of the Northern
Pacific company which might sacrifice
its interests to rival, would be disas-
trous to the development and prosperity
of the Great Northern company. And at
the very time when the Northern Sc
curities company was formed and incor-
porated, by means of the large holdings
of Northern Pacific company stock by
himself and his associates acting with
him and by the then purchase by ]: P.
Morgan & Co. of the Hartman holding
of such stock. said j. P. Morgan was
able at once to transfer and have trans
ferred to the Northern Securities COM
pany large and controlling majority of
pany as was done; thereby accomplishing
Gas was believed) the purpose of securing
that stock against hostile raids in the
future.
No Purpose to Control.
with respect to the stock of the Great
that when the Northern Securities COM
pany was Incorporated it was the purpose
and intent of Mr.. Hill and other large
stockholders of the Great Northern COM
pany who acted with him to sell and dis
pose of to the Northern Securities COM
pany for it's stock. their several hold
lnRS OF STOCK IN the Great Northern COM
pany aggregating then about $35, 000, 900
to the end that such large amounts of
Great Northern company's stock should
be kept together. and (as it was hoped)
aid in giving permanency to the manage
ment and policy which had controlled and
was controlling the railway and develop
ment of that company. And 1t was their
purpose that all other stockholders of the
Great Northern company who might
choose to do so, should be permitted
to sell or exchange their stock of that
company for stock of the Northern Sc
curities company on the same terms; and
it was hoped and expected that many
would do so.
But the said Hill and his associates
had no power or control which could en-
able them to transfer or cause to be
transferred to the Northern Securities
company so much as one-fourth of the
stock of the Great Northern company.
The evidence, therefore. fails to show
that the Northern Securities company
was formed for the purpose Of acquiring
and holding a majority of the stock of the
Great Northern company, as well as that
of the Northern Pacific company AL
though that result followed soon after,
and may have been desired and antici-
pated.
State Antitrust Law.
3d. One question in this cause is
whether the acquisition by the Northern
Securities company, in the manner above
stated. of majority of the capital stock
of both the Great Northern and Northern
Pacific companies which own and operate
parallel and competing railroads across
the State Of Minnesota and its ownership