River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1904-03-17
The MERGER
DECLARED ILLEGAL.
The Supreme Court of the United
States Decides that Mer-
ger Cannot Obtain.
This Decision does not Affect the
Case of the State of Min
nesota Now Pending.

Washington, March 15-The opin-
ion of the supreme court of the
United States in the case of the
Northern Securities Company vs. the
United States, involving the merger
of the Northern Pacific and the Great
Northern Railroad companies, was
handed down yesterday, and was in
favor of the government. The opin-
ion was read by Justice Harlan.
The opinion of the United States
circuit court for the district of Min
,nesota was affirmed.
The effect is to sustain the conten-
ton that the Sherman antitrust law
applies to railroad combinations of
the character in question.
Justice Harlan said that in the
merger of the roads the stockholders
disappeared, and reappeared in the
securities company, the two thus be-
coming practically consolidated in Il
holding company, the principal OBJ
iect being to prevent competition. He
continued:
NO scheme or device could more
certainly, more effectively come
within the prohibition of the anti
trust law, and it is within the mean
ing of the act a trust"
The case has attracted more atten-
ton than any other suit before the
court since the first insular eases
were decided, and has been regarded
by bench and bar rs equal in impor-
lance with those cases, and with the
income tax case.
1t was argued in December last for
two days and attracted general at
10 ~ hot Al
viously, when the decision was rem
dered hy the circuit court for the dis
trict of Minnesota.
The action was brought in the cir
cult court under the law Of Feb. II,
1903. which was for the purpose OF
eXpediting The case and was heard
by the four circuit Judges of the cir
cult.
They united in a decision favorable
to the United States and opposed to
the contentious of the railroad com
panies.
The suit was instituted by the
United States against the Northern
Securities Company and the two rail
road companies. the Northern Pacific
and the Great Northern, and their
leading stockholders, for the purpose
of dissolving the merger of the two
roads which the United States de-
clared had been created by the crea-
ton of a holding company, the Sec
uritieS company.
This consolidation was in effect
pool created to promote the interests.
not of one system, at the expense OF
the other, but of both AT the expense
of the public.
The railroads claimed that the
transfer of the stock Of the two COM
panies to the Securities company
was in the nature of a sale and per
fectly legitimate.
The contentious of the Security
company were reviewed and Justice
Harlan said they had received full at
tention.
The following is a synopsis. pre-
pared by an expert, showing clearly
the points involved in the Northern
Securities case:
/. Has combination been accom-
pIshcd by means of the Securities COM
pany of Section ! OF the antl-fuSt 9cl!
9 Have the Defendants monopoilzed on
attempted to monopolize any part or the
interstate or foreign commerce or In we
United States in violation of section ~
3. Was the, relief granted by the CIR
cult court authorized by law?
The government maintains that IN ar
frmatiVe answer should be given 10 each
of these questions. If either question or
2, together with question }, should be
answered in the aflirma tive the govern
ment contends that the decree or the
circuit court must be afiirmed
The gist Of the government charge IS:
d. That combination has been FORMED
by centering the title to majority Or
the railway shares in the Securities Com
p'i S. That the Securities Company. by OBJ
tanning a majority of the stock OF the
two roads, has acquired monopoly
in viz
g. When the natural effect Of an agree
ment is to prevent competition, the agree
ment is in restraint of trade ana promo
Z. in order to prove that a combina
ton or monopoly exists within the mean
ing of the act il Is not necessary to show
that the immediate effect is TO suppress
connection or establish a monopoly. 1t
is sufficient to show mat they tend 10
bring about these results.
g. 1t is not necessary to show that the
combination has actually raised prices,
suppressed competition or established q
monopoly. 1T is enough that the neces-
sarv effect of the combination is to give
the combination the power TO do these
things
that the combination agreed 70 do the un-
lawful acts. 1t is enough that the com
bination acts in pursuance Of an object
10. If ii be shown that combination
or monopoly has been formed the neces-
sary effect of which is to restrain trade
or establish monopoly, the act has been
violated and il Is not necessary to snow
the motive or desire.
H. A combination Of competing lines
of interstate railways is a combination OF
trade within the meaning of the anti
trust act.
70 1t is no violation of the reserved
rights of states but on the contrary Is
clearly within the federal power. for con-
gress to prohibit anything which has
tendency to restrain interstate trade.
10. Ownership of a majority Of It's
stocks constitutes the control of corpor-
alton when the inquiry is whether a com
bination has been formed 10 restrain
trade.
IA. Therefore. by transferring a ma
tority of their stock to a common trustee.
the two railway companies have com
bined a violation of the act.
16. The Securities Company has mono
polized a part of interstate commerce, the
violation of section g by acquiring a ma
jority of the stock Of two competing
railways.