River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1903-08-06


curities company under the general laws
of New Jersey and with a capital of
$500, 900, 900, was completed Nov. 10, 1901,
Neither the Great Northern company nor
the Northern Pacific company, by any
act Of it's directors, or any corporate,
had anything to do with the formation or
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.
1.-THE Northern Securities company
when formed offered and agreed to pur-
chase and to pay for in it's own stock at
Northern Pacific company at the price of
Sll5 per share and any stock of the Great
Northern company at the price Of $3.50
per share; and large amounts OF the
stock of said two railroads were at SUCH
rates and so paid for, purchased from
said promoters and other stockholders
Northern Securities company
About the same time Mr.. Hartman
G Co. all the Northern Pacific company
stock which they had purchased as afore-
said-both common and preferred
said J. +. Morgan & Co at the same
time sold all the same stock to the North
ern Securities company, who paid the
Hartman and his associates; a part of
such consideration being something more
than $82, 600 900 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 last named
company so that by Dec. 1, 1901 said
Northern Securities company had become
| the owner of considerable more than a
| majority of the stock of the Northern
| Pacific company and 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
| become and still is the owner of about
| SO per cent of all the stock Of the North
| ern Pacific company and Of about rs per
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 it's 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-
| board terminals, and of the region of
country traversed by their railroad sys-
''This was the avowed purpose of 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 were apprehensive
that any hostile control OF the Northern
| Pacific company which might sacrifice
it's interests to a 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-
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 a large and controlling majority of
the stock of the Northern Pacific com
pany as was DONE thereby accomplishing
Gas was believed) the purpose of securing
that stock against hostile raids in the
future
Mo Purpose to Control.
with respect to the stock of the Great
| Northern company the evidence shows
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 its stock their several hold
ings of stock in the Great Northern COM
pany aggregating then about $35 900, 900
| to the end that such large amounts of
| Great Northern companys stock should
be kept together, and Gas it was hoped)
f<Ht
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
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
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 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-
State Antitrust Law.
-. One question in this cause is
whether the acquisition by the Northern
Securities company, in the manner above
stated, of a 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
of such stock is a violation of the Mime
| sofa antitrust law-LawS of Minnesota
1899, CHI. S59-which provides. as above
stated, that: Any contract, agreement
| arrangement. or conspiracy, or any COM
| bination in the form of a trust or other
| wise hereafter entered into which is in
restraint OF trade or commerce within
and declared to be unlawful.
Language in the act extending these
| provisions to interstate commerce is here
| omitted and disregarded and the act con-
within the state, that being a proper sub
ject for state legislation, though carried
on by the same instrumentalities used in
interstate commerce. The language just
quoted is evidently taken from the act
of congress of July 2, 1890 (26 Stat. 209
G. SAD. known as the Sherman antitrust
act, which has received consideration by
the supreme court of the United States
in several cases.
Effect Must Be Direct.
1.-THE proper construction of the Sher-
man antitrust act, so far as it relates to
| railroad transportation, deduced from
these decisions of the supreme court ap-
pears to be this:
la The act applies to railroads. And
all contracts made between railroad COM
effect of preventing competition by fixing
rates, or empowering persons to fix them,
and agreeing to conform to them when
fixed, are in restraint of trade and within
the provisions of the statute. whether
the rates so fixed are reasonable or IN
reasonable.