The Logan Republican. [volume] (Logan, Utah) 1902-1924, 1912-05-11

majority of the stock of the North
ern Pacific Railroad company, but in
so doing they overlooked the fact that
majority of all the stock did not
control the company, as the prefer
red stock was subject to retirement AT
the option of the common.stock hold.
ers and the Hill-Morgan interests held
majority of the common stock,
which enabled them to compel the re-
tirement of the preferred stock. This
situation brought about an agreement
between both parties to put the stocks
Of the Northern Pacific and the Great
Northern Railway companies into a
holding company formed for that pur.
pose under the name of the Northern
Securities company, which company
should control the Great Northern, the
Northern Pacific, and the Burlington
systems, in which control the Union
Pacific, through its enormous holdings
in the Northern Securities company,
would have exercised a very powerful
II not a dominating, influence. This
combination aroused great public op.
opposition throughout the whole
country, and in March, 1902, by d.
rection Of President Roosevelt, Attor.
ney General Knox filed a petition un-
dor tho Sherman Iaw m hraaL IN THE
merger as being a combination in res.
traint of trade in violation of the
Sherman law. The specific relief ask.
ed in this petition was that the com.
bination be declared void; that the
Northern Securities company be en-.
Joined from exercising the rights of
ownership over the shares of stock
Of the Northern Pacific or the Great
Northern Railway companies held by
it; that 1t be compelled to surrender
the certificates of stock issued by 1t
in exchange for the shares of those
companies; and that the various in.
dividual and corporate defendants be
enjoined from doing anything to con.
tinue the control OF the Northern Sc
curities company over those two lines
Of railroad. The decree OF the circuit
court substantially followed the pray.
er. It enjoined the securities com.
pany from voting the stocks in the
railway companies held by 1t or from
collecting dividends on them, but
provided that nothing in the decree
should be construed to prohibit the
securities company from returning the
stocks Of the respective railway com.
panies to the holders and owners of
its own stock originally issued in
exchange or payment for the stocks
Of the railway companies.
That decree was affirmed by the
Supreme court. The securities com.
pany, however. instead of attempting
to return the stocks of the railway
companies held by 1t to the indi.
viduals from whom it had received
them in exchange for its own stock,
reduced its capital from $4,000 900, 200
to a trifle under 100000 and di.
rected the distribution of the stocks
OF the railway companies held by il
pro rata among all of it's stockhold
ers. Mr.. Hartman and the Union
Pacific objected to this distribution
contending that they should get back
what they had put in, and brought
suit to compel the securities company
to make this return. But the courts
denied them that relief, holding that
the pro rata distribution was proper
throughout the discussion in all
the courts 1t was fully recognized that
no principle of law could prevent the
same group of individuals from &C.
curing and owning stocks in com.
peting corporations in the same pro.
portions; that what the law did con.
denim was the acquisition and perpetu.
alton of the control of competing cor
porations by means of vesting their
stocks in corporate hands, thereby
preventing the distribution and Sc
paration of ownership which always
result from individual stockholding.
Back in 1895, when an earlier effort
was made on behalf of the Great
Northern company to secure control
of the Northern Pacific Railway by
putting the stock of the latter in the
hands of trustees for the benefit OF
the stockholders of the Great North
ern, the Supreme Court had, while
condemning that arrangement, ex.
pressly recognized that individual
stockholders could lawfully acquire by
purchase majority or even the whole