The San Francisco call., 1903-12-16
KNOX ASSAILS
RAILWAY POOL
Blunt DenunciatiOn of the
Methods Of Morgan, Hill
and Their Merger Colleagues
CREATION OF FIAT STOCK
Attorney General Says Public
Is Asked TO Pay Dividends
Upon "Watered' Securities

WASHINGTON. Dec. 15.-Attorney
General Knox resumed his argument
in the Northern Securities case in the
United States Supreme Court to-day
He declared that by the union Of the
Northern Pacific and Great Northern
Railway Companies, two competing
interstate railroads had been brought
into such relations that their independ-
ence as competitive factors in inter-
state commerce was destroyed. The
thing that had been done was declared
illegal. he said. when brought about by
the methods pursued in the joint traf-
fc and trans Missouri cases. These
were cases of contracts or agreements
between independent and competing
lines Of railroad for the regulation Of
traffic charges. The Government
charged that these agreements re-
strained interstate commerce, and the
Supreme Court sustained that conten-
ton.
DEFEATS POLICY OF THE LAW.
Knox then discussed the end accom-
plished by the merger of the railroad
interests. saying:
The device resorted to in this case,
If sustained. defeats the policy Of the
Law. as it accomplished all and more
in the way Of effectual destruction Of
competition than was accomplished in
the trans Missouri and joint traffic
cases. You may call it merger, a
combination. a pool. a conspiracy, a
consolidation. a contract, a securities
company. or what you like. The thing
ii accom- Dlishes is not varied by var
iation in name or manner Of bringing
il about"
Knox declared that Morgan and Hill
had the power TO suppress competition
between these two roads when they
held the control Of the majority Of the
stock Of the two. He asserted that they
executed that power and actually sup
pressed and destroyed competition be-
tween them the moment they parted
with the legal title TO their segregated
holdings and vested them in the North
ern Securities Company.
SCORES FINANCIAL KINGS.
1T is bad enough he said. Ito bring
the entire railroad facilities Of an inn
portant section Of the country under
monopolistic control, but when to the
power 10 fix charges for transportation
you add the creation Of scores Of mill
lions Of fat stock upon which those
charges are expected to pay dividends
YOU impose an unjustifabie burden up
on the people and exact toe high price
for a successful evasion Of the law.
While il may be true that the re-
capitalization OF these companies was
based upon existing market values for
their stock. yet existing market values
rested at that time upon total fOrgetful-
ness Of the fact that the progress of
material prosperity is not continuous
and that those values were lifted upon
the wings Of an optimism that had con-
verted into stock and stock values all
the prosperity in sight. as well as all
hopes and expectations OF many future
years.
This thing was done when men who
have been regarded as wise men and
safe men lost their hold upon their
judgment and failed 10 withstand the
temptation to gather for their instant
personal advantage the fruits which,
conserved. would have lasted many
years ana Deeu luIulSneu many people.
The question in this case is not
whether Congress can regulate and has
regulated State corporations or the
ownership Of their capital stock The
question is: Can the owners OF such
capital stock regulate interstate COM
mercer"
YOUNG DEFENDS THE MERGER.
George B. Young followed on behalf
Of the securities company. Young con-
tended that the transfer Of the stock
Of the railroad companies to the secu-
rites company had been entirely free
from the features which had operated
10 throw discredit upon the formation
Of trusts The transaction was moth
ing more than a transfer Of property.
we are proceeding upon the theory"
he said, that an out and out sale was
made. and unless the court is prepared
10 hold that Congress should exercise
exclusive control Of all transfers Of
transportation agencies engaged in in
terstate commerce we fail 10 see how
this transaction can be held 10 become
q. combination in restraint of trade or
against the antitrust law"
DENVER. Dec I5.-The city charter cor
b fTnyI o~Taa