The Minneapolis journal., 1903-04-20
Clews' Rational View.

The regular weekly letter OF that Nestor
of Wall street, Henry Clews, relates en-
tirely to the Northern Securities decision.
Mr.. Clews is very far from being an
alarmist He believes that the decision
has saved the country from serious f1nan-
cal and political excesses. A decision
favorable to the holding company device
would stimulate the merger process and
generate a great speculative debauch in
the new securities, which would have been
followed by inevitable reactions in the
stock market and money panic. Mr..
Clews suggests that the restoration of Sc
curities which have been withdrawn from
the market in large amounts thru the
buying control operations will ulti
mately tend to encourage stock exchange
activity. He says:
IF the case Is appealed to the United
States supreme court, the final decision
will not be obtained until the end Of the
year; in the meantime it will be like a
cloud hanging over the market The wis
est course. therefore, would be to accept
the present decision and abandon the ap-
peal and then meet the emergency in the
DeSL pOSSlDio way, eSpSC4diiy DIS tllS SUI
preme court can hardly avoid confirming
the decision.''
Mr.. Clews sees no hardship entailed upon
the holders of Northern Securities stock
in exchanging it for their former Great
Northern and Northern Pacific stock,
which will have market value up to the
price of the holding companys quotation,
until Of nd ffor.
collateral quality. His advice is emf
nently sound, for it is certain that the at
torney general put himself on very safe
ground when he proceeded against the
Northern Securities company.
There is no doubt that the break in Wall
street last week was worked by the bears
on an erroneous Interpretation of the cir
cult court decision. 1t was assumed that
it would apply to all railroad and indus
trial consultations and engender a gen.
eral dislocation of business arrangements
and that there was to- be no restriction OF
competition, but a resumption of the vi
cious and wide spread rate-cutting which
led to the enactment of the interstate
commerce law. What has been done is
that, following the decision in the joint
traffic cases by the supreme court, ad-
verse to such devices. on the ground that
they were violative of the antitrust law,
the federal circuit court Of appeals In this
case has decided that the holding. com
pany device-the consolidation. of two rival
and competing lines under the control of a
third corporation-ts also a violation OF
<3s1 law, in that the holding company Is
Organized to do that which has been by
congress declared to be illegal, /. e., the
suppression Of competition. | Z; Il r.
1t is hardly possible for the supreme
court to construe the antitrust law so as
/ to bring a violent storm and stress upon
the country, which might follow declara.
ton that most business contracts or com
binations, such as contracts to maintain
wages, contracts Of incorporation, or any
line Of business partnership contracts, are
illegal.
1t has been argued by some, on the
ground that in rendering the decision o
the supreme court in the joint traffic as.
sociation case in 1898, Judge Peckhan
said that, Notwithstanding the general lib
erty Of contract which is possessed by the
citizen under the constitution, Eve FIND
that there are more kinds of contracts
which, while not in themselves immora
or nahum in Sc, may yet be prohibited by
the constitution of the United States, or
In certain cases. by congress; the ques-
ton Is for US one OF power only and moi