The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-04-05
Commissioner Lane Makes an
Instant Reply.
IN MAGNATE'S DEFENSE
Commerce Law Not
Violated by His Acts.
Acquiring Of Railroads Not
Within Antitrust Act.

We Shington, April 5.-CGntinuing his
argument today before the interstate
commerce commission in support of the
legality Of Mr.. Harriman's railway op-
eratiOns. Attorney John G. Milburn laid
down the following general PROPOSE
tions:
l. A restraint of trade, to be within
the antitrust act. must be the direct
INN. edfate and necessary effect of the
transaction, and not merely an indirect
or incidental result.
2. A restraint of trade consequent
upon a purchase of property. in any
Of its various ferns, is incidental mere
Iy ana therefore not within the act
,. The purchase must of course be
real; if a mere device for the sup
preston of competition, as it was held
to be in the Northern securities case,
While it may be effective to operate
upon the legal title as between the
parties, t is in fact unsubstantlaI ana
may be disregarded.
4. Provided the purchase be real anu
substantial. the motive wAich Inauces
il cannot affect the result; for any re-
sultant restraint cf trade is stlll onIy
inconsequenlial and incidental to the
exercise of an absolute and undoupted
right, that is, the right to acquire pro-
, perty-
B. Therefore the purchase by a rail-
road cCmpal V, within its corporate pow
ers, of an interest in another line OF
railway, is not within the act, because
the restraint upon trade, if any, is
not direct but merely incidental to the
purchase.
8. If, however, the purchase by
railroad company, within its corpor-
ate powers, a line of railway, made
to suppress competition, be obnoxious
to the act that result does not follow
if the purchase be made for legit1-
mate and proper purpose of the pur-
oh, fr1cr Yar1raT NJ
= In any event. a purchase by
railroad company of an interest in
line of railway which is not parallel
aud competing is not within the act.
8. The purchase by the Union Pa
cific of its interest in the Southern Pa
cific was not made to suppress compe-
titiCn. but to protect its property by
an extension of its line in that way to
.. The Union Pacific and South
ern Pacific are not parallel or COM
peting lines or systems.
Outline of the Speech.
This summary proved to be the
outline of his entire speech. and he
followed the presentation of these
points with an elaboration of them,
giving special attention to the con-
tention that the purchase of the South
ern Pacific by the Union Pacific was a
legitimate business transaction and not
in any way in contravention of the
antitrust law. He said that if the
laws of state by which the Union Pa
cifc was chartered had prohibited
such a purchase it could not have been
legitimately made. but that in no event
could the federal anti trust law be
held applicable.
He contended that the main purpose
of the purchase had been to gain
through line from Omaha to San Fran
cisco and declared that there had been
no subterfuge about or hidden motive
in the deal. 1t had been a bona fide
20 nr-fff
as a business transaction from any
point of view. Having no purpose of
preventing competition. it did not fall
within the meaning of the Sherman
law.
Calling attention to the fact that
Mr.. Harriman'S purchase of Southern
Pacific stock had occurred at the same
time as his purchase of Northern Pa
cific stock. Commissioner Lane sug-
gested that the two transa ctions might
indicate purpose to control competi-
tion in transcontinental business, but
Mr.. Milburn said that the record in
the case indicated no such purpose
the two transactions being independ-
ent and separate.
just Mere Dream.
But is it not a reasonable inference
that the primary purpose was to get
control of these three great transcon-
tinental lines for the control of rates -
Mr.. Lane asked. but Mr.. Milburn
would not admit that any motive had
ern Pacific stock except to get the line
from Ogden to San Francisco. Taking
that portion it must also take the line
from New Orleans to San Francisco
and Portland. Moreover, the negotia-
tions for the Southern Pacific stock
had been begun long before any effort
was made to obtain Northern Pacific
stock. ANY other theory is a mere
Dream he declared.
eff 1t is a dream it is not the dream
of this commission, but of Mr.. Har-
rfman.' responded Commissioner
Lane. and Mr.. Milburn turned his at
tention to the question whether the
Union Pacific or Southern Pacific are
parallel and competitive. He declared
those were not.
In reply to Commissioner Clements.
Mr. Milburn said it was his contention
that a purchase such as that made in
this case, even though it does effect a
restraint of trade, is not controlled by
the antitrust act IT was sufficient II
there was purchase. He would not
ing an opinion as to what should be
said in case monopoly was estab-
lished.
Mr. Milburn complained of the COM
mission in singing out the Hartman
interests for investigation and said he
would be pleased to have an inquiry
into the entire subject of community
in this. He would have the Pennsyl-
vania, the Vanderbilt, the Northern
Pacific, the Rock Island and the Great
Northern systems inquired into. for all
of these had grown up under the eyes
of the commission by the acquisition
of stock and consolidation and all con-
troll parallel and competing lines. He
believed a general inquiry would result
in showing the beneficial effects of
large concerns The mere matter
Of the size of a concern had no terrors