The Washington times., 1912-10-20
THE MERGER AND THE ANTITRUST ACT

IL there had never been any further adjudications,
under the antitrust act in railroad cases, following
the Northern Securities litigation, it would seem
pretty certain that precedent had been established
for permanent injunction against the merger Of
Washington companies. But there came along
later the decision Of the Circuit Court in the Harri-
man case, which is yet to be finally passed upon by
the Supreme Court.
The Hartman case thus far has been a defeat
for the Government. The court held with the rail-
roads, that the Southern Pacific is connecting line
of the Union Pacific, rather than parallel and COM
peting road The difference was held to be basic;
the Union Pacific was entitled to take over con-
Meeting road
The question then arises as to whether, frst this
Hartman decision will be sustained by the Supreme
Court, and second, whether IL it is sustained the
courts would follow the Northern Securities the
Hartman decision in considering merger Of street
car companies in Washington.
There are other differences between the two
great railroad cases that add to the complications
The Northern Securities presented the case Of a
third company in no wise an operating concern be-
coming the holding institution for purely financial
reasons. The Union Pacific is different, in that
the Union Pacific, an operating company, bought out
right the stock Of the Southern Pacific, and thereby
became directly the controlling owner Of that road.
would make it impossible for the courts to follow the
rule laid down in the Northern Securities is a
matter for the lawyers and the courts to settle. No.
bodys opinion is worth much on it at this time.
There is, in any case food for very serious re.
Election by stockholders Of the Capital Traction Com
pany who may be asked to exchange their shares for
those Of the Maryland Virginia holding corporation
That is exactly what the Union Pacific crowd did
they held a vast amount Of stock in the Northern
Paciic-enough actually to control (which they
exchanged for Northern Securities shares When the
dissolution of Northern Securities came the court did
order that the original holders should have their
exact original stocks returned to them 1t directed
instead that the distribution should return them their
proper pro-rata proportions of BOTH Northern Pa
cific and Great Northern. That is supposing thai
one man had put in 900 shares Of Great Northern
and another 900 shares of Northern Pacific under
the distribution as ordered, each got something like
500 shares of Northern Pacific and 500 OF Grea
Northern.
This rule of distribution what deprived Har
riman of control Of the Northern Pacific.
Now let us see what that same rule would NEAR
if applied to distribution of Capital Traction anc
Washington railway shares, following dissolution
of the Maryland-Vrgnia holding corporation. Take
the case of man who had put in 900 shares o.
Capital Traction. He would get back not his ,OO(
shares Of Capital Traction, but instead he would &c
his prorata share of Capital Traction and Washing
ton Railway. AS the Washington Railway is appar
emily going into the merger on a very high vaua
tion that would mean that Capital Traction holder
would in effect exchange their Capital Traction il
part, for Washington Railway stock at very hgl
valuation on the latter. 1t would be anything but
good deal for them according to all the financial in
formation that is available at this time.
Stockholders Of the Capital Traction Compan,
will be wise il, before punging into any speculative
merger proposal, they take this statement of th'
possible legal situation to their lawyers and get
full opinion on the possibility of this very thing hap
penng to them.