New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-03-15
HISTORY or THE CASE.

persons
HISTORY or THE CASE.
The corporation known as the Northern Securities
Company was formed in November. 1901. with
capital Of Aoog.eH- II chartered under the
laws of Nev-Jersev FOR the purpose Of keeping
under the same control the shares Of the Northern
Pacific and the Great Northern Railroad companies
after they had Jointly purchased the Chicago. Bur-
ington and Ouinc- read. The new corporation
had the largest capital Of any in this country save
the United States Steel Corporation. James J. Hin
vas made president. and among the directors were
z. H. Hartman. George W. Perkins, Jacob II.
Schn and Daniel s. Lamont. The purpose Of the
incorporation to control two great competing
companies and 10 operate them for the benefit Of
the stockholders Of the security holding company.
The organization OF the new company the cut
come OF contest between the Union and Central
Pacific interests. represented by L. H. Hartman
and Kuhn. Loeb & Co. and the Northern Pacific
and Great Northern interests represented by J. J.
Hill and J. 2. Morgan for the control OF the Chi
cago. Burlington and Quincy road. The former
interests demanded representation on the Burlins-
ton directorate. and there a fierce struggle
for control in which bids for Northern Pacific
stock TO 100.
At the time OF the incorporation OF the Northern
Securities Company the two railway systems were
the only trlnsconnental lines extending across the
northern tier of States from the Pacific Ocean to
the Great Lakes. Together with leased. controlled
and owned lines these roads aggregated about
twenty thousand miles. and the two systems were
In active competition. fighting each other at every
point for advantage in freight and passenger
rates.
The formation Of the new company was expected
70 end the rivalry between these transcontinental
lines. \ practical merger Of interests represented
by 1921 SECS. with 2222l miles Of railroad was ei-
fected.
While Wall Street interests welcomed the solution
OF the problems involved in rate the public feel
Ing soon showed itself that the merger was pref
judicial public interest The first steps TO ques-
ton It were taken in Nebraska. but before any
formal action there Governor Van SAINT Of Mime
sofa. through his Attorney General. asked per-
mission from the Supreme Court Of the United
States to file bill OF complaint. asking the new
corporation 70 show cause why II should not ne
enjoned from voting any ~ the capital stock OF
the two railway companies. or appearing at the
storkholGers' meetings as a stockholder. OF taking
part IN the management OF tho railway lines. or
acting directors Of either road, or making any
arrangements or combinations, by contract or
otherwise having for their object. effect or result
the consolidation or establishment OF Joint merge
rneut or control IN any manner whatsoever Of tho
said Great Northern and Northern Pacific Kali
way companies. their lines Of railway or proper
ties" or controlling their stock. and that tho
Northern Securities Company be required 10 re-
assign and transfer ell Of the stock Of either one or
the other 81 the said railway companies TO the
person or persons or corporations from whom or
which it received the same upon receipt by II ot
the stock issued IN exchange therefor"
This suit was decided IN favor Of the company.
but this decision was reversed appeal and It u
now before the Supreme Court. Proceedings were
also begun in the state Of Washington.
Before a decision was handed down after the
argument OF the first case IN January. 1902. the at
| tention OF the whole country had been drawn 70
tho situation and IL declared by leading econo-
rnists and statesmen that the Organization Of the
/ new company was IN violation of the sherman
Antitrust act. The subject was taken up by
J and he
eral Knox Tor an opinion IN regard 70 the legality
/ Of the merger. This resulted In an opinion from
the Attorney General that the formation OF tho
Northern Securities Company violated the Sher-
man act The President announced on February
/ p 1902 that Dee had instructed Attorney General
/ Knox 10 prepare a case against the company
/ This was based on tie violation of the first two
/ Sections OF the sherman act which are these.
Section J. Every contract. combination in the
States with foreign nations. is hereby declared
! such contract or engage Ia any such combiuato
/ shall be deemed guilty Of misdemeanoT' ana on
! eFceedrg 5000 OF by imprisonment not exceeding
/ section . Every person who shall ruonopolze or
attempt monopollZe. OF combine Or cOnsIIre with
a. ne Iy55e or commerce 9T1oug the several states
or win foreign nations. shall be deemed guilty Of
a 'misdeme aEOr and on conviction thereon sAa4l %
! Irisonuent not exceeding year, by both said
! puuIshmeuts in the discretion OF the court
] on March g. 1892. Attorney General Knox hled a
/ Tetitiou with the United States Circuit Court IN
| It. Paul against the Northern Securities ComI.anS
and the Great Northern and Northern Pacihc ran
| road companies, setting forth the grounds Tor Or
position TO the merger, that it was not organized
In good faith purchase and pay for the STOCKS OF
the TWO companies. but TO incorporate the poOls
/ OF the stocks The arguments were hefiIa at =
J Paul and "a St Louis. and on April >, lSo, 'H'
United states Circuit Court OF Appeals AT 81 tdul
] handed down a decision in favor or the govern
/ uent The action had been brought In the Ilrc4!t
Court under n new law FOR the purpose OF eNpeu =
/ Ing the progress of the case and was EeaId by
/ four Judges. who unanimous In tHelr ue-
] CisIon. -- s,-. %,
/ The Northern Securities Company at once i!ed an
appeal 20 Supreme Court OF the United olaT,S'
/ and the argued at Washingtoh on lt- IL
/ cember Il and %. The decision OF me g., ~
Court Paul, which the hlShesJ coLlt III ~.
land now afirns enjoined the Northern
from voting the stock OF the Northern FacIHc 4l.
Great Northern railroad companies declaIlas ~, -
| n had been acquired by a combination among VIZ
! attendants IN restraint OF trade ana CoIHlIIeI
among the several States which the Anti FusI a
! declared fllegal The held that u pidcS,I
control OF two rival lines in the hands OF a slil6
/ coruoratIon. and destroyed competition " IeH Illo
Z auneal was taken. n stay of proceedlIleS W.
! rTanred and the Northern Securities company Hds
allowed to paw regular dividends until ths geSIsIoA
l should be made on the appeal now hAnoed UO"'''