The pioneer press. (Miller, Hand County, S.D.) 1893-190?, 1903-08-06
MERGER DECISION IS
AGAINST THE STATE
SECURITIES COMPANY is DECLARED A LEGAL
HOLDING AND NOT A RAILWAY COMPANY.
Judge Lochren Holds it Does Not Violate Law Against
Consolidation of Roads and State Antitrust
Law-The Decision Rendered

"a any tIilS 70 10 with the formation or
subsequent action Of the Northern Sc
curitles company; but Mr.. Morgan Mr..
mn and other stockholders of the North
erh racine company and Great Northern
company were individually the promoters
VINO caused and procured the incorpora-
tion OF the Northern Securities company
Tor the purposes above stated.
The Northern Securities company
when formed offered and agreed to pur-
chase and TO pay for In its own stock at
part GlOO per sharel any stock Of the
Northern Pacific company at the price OF
Sllo per share and any stock of the Great
Nofthern company at the price Of $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
u said two railroad companies by said
Northern Securities company.
About the same time MIR. Hartman
anu his associates sold TO J. Z. Morgan
a. Co. all the Northern Pacific company
stock which they had purchased as afore-
said-both common and Preferred
amounting to more than SIS,OOO.ODO, and
said J. Z. Morgan & Co. at the same
time sold all the same stock TO the North
ern Securities company, who paid the
consideration therefor directly to Mr.:
Hartman and his associates; a part of
such consideration being something more
than $50. 100000 Of the stock of said
Northern Securities company. That pur.
chase was completed on Nov. is. 1901.
ION Jan. l. 1902 the Northern PACING
company paid off and retired its preferred
stock, having raised the money Tor 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 ran
road companies sold their stock TO the
Northern Securities company, receiving
in payment or exchange therefor, at the
rates aforesaid. stock Of the last nameg
company so that by Dec. l, 1901, SAID
Northern Securities company had become
the owner of considerable more than
ma iority of the stock Of the Northern
Pacific company, and large amount, but
less than "A majority Of the stock OF the
Great Northern company. Similar pur-
Chases from stockholders continued, ana
suit the Northern Securities company had
become and still is the owner or ABOUT
90 per cent Of all the stock of the North
ern Pacific company and OF about 20 per
cent OF all the stock of the Great North
ern company
Conclusions of Law.
"First-It is obvious from the fore
going facts that the Northern Securities
company was incorporated with the pur-
pose and intent on the part or It's pro-
by exchange for its stock, and should
own and control considerable majority
OF all the stock OF the Northern Pacific
company, and thus secure that company
AGAINST the danger OF any future raid
upon its stock which might place its man
agcment and the resulting control OF the
burlington system III lIb ID"ti VI NA9
rival railroad corporation, whose interests
might be hostile TO the development ana
property of the Northern Pacihc and
Great Northern companies ana their sea-
board terminals. and OF the region or
country traversed by their railroad sys-
tens.
Morgan and his associates who acted
with him in this matter, including Mr..
Hill and other large stockholders OF the
Great Northern company, VINO also held
# sfs IN a
Pacific company and were appTehenslve
that any hostile control of the Northern
Pacific company which might sacrihce
its interests TO rival, woutd De dlsas-
trous TO the development and prosperity
of the Great Northern company And at
the very time when the Northern Sc
curtties 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 J, n,
Morgan & Co. of the Hartman holding
of such stock. said J. p. Morgan was
able at once 70 transfer and have trans
ferred to the Northern securities com.
pany large and controlling majority OF
the stock OF the Northern Pacific COM
pany as was done; thereby accomplishing
les was belleved) the purpose Of securing
that stock against hostile raids IN the
future.
No 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 Il was the purpose
stockholders of the Great Northern com
pany who acted with him 10 sell and dis
pose OF TO the Northern Securities COM
parry for it's stock, their several hold
ings OF stock in the Great Northern COM
pany aggregating then about S31,OO.VO9
10 the end that such large amounts ot
Great Northern cOmpany's stock should
be kept together. and (as IL was hoped
aid In giving permanently to the manage
ement and policy which had controlled ana
was. controlling the railway and develop
menk of that company. And IL was their
purpose, that all other stockholders Of the
Great Northern company who might
fa esl o 90 essnge i theT stock OF that
company for stock OF the Northern Sc
curitiss company on TIRE same terms; ana
it was hoped and expected that many
would do so. = sS
but the said Hill and his ASSOCIATES
had no power or control which could eR-
able them to transfer or cause 10 .pe
transferred to the Northern Securities
stock OF the Great Northern company.
The evidence, therefore, fails 10 snow
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-
patsd
state Antitrust Law.
80 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 violation of the Mime
sofa antitrust law-IIaws of Minnesota
1890 CHI 359-which provides. as above
stated that: Any contract, agreement.
arrangement or conspiracy. or any COM
bipation in the form of a trust or other
wise hereafter entered into which Is in
restraint of trade or commerce within
this state Is hereby prohibited
and declared 10 he unlawful
Language In the act extending these
provisions 10 interstate commerce Is here
omitted and disregarded and the act con-
sidered valid as 70 trade and commerce
within the state. that being proper sub
iect 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 y 1890 (26 Stat. 2O9;
C. 647l known as the Sherman antitrust
act which has received consideration BY
the supreme court of the United States
in several cases.
Eject Must BE Direct.
''rrhe proper construction OF the Sher-
railroad transportation. as deduced from
these decisions OF the supreme court ap-
pears to be this: