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The Northern Securities Company was a short-lived American railroad trust formed in 1901 by E. H. Harriman, James J. Hill,
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and their associates. The company controlled the
Northern Pacific Railway The Northern Pacific Railway was a transcontinental railroad that operated across the northern tier of the western United States, from Minnesota to the Pacific Northwest. It was approved by Congress in 1864 and given nearly of land grants, wh ...
; Great Northern Railway;
Chicago, Burlington and Quincy Railroad The Chicago, Burlington and Quincy Railroad was a railroad that operated in the Midwestern United States. Commonly referred to as the Burlington Route, the Burlington, or as the Q, it operated extensive trackage in the states of Colorado, Illin ...
; and other associated lines. It was capitalized at $400 million, and Hill served as president. The company was sued in 1902 under the
Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. ...
of 1890 by the Justice Department under President
Theodore Roosevelt Theodore Roosevelt Jr. ( ; October 27, 1858 – January 6, 1919), often referred to as Teddy or by his initials, T. R., was an American politician, statesman, soldier, conservationist, naturalist, historian, and writer who served as the 26t ...
, one of the first antitrust cases filed against corporate interests instead of labor. The government won its case, and the company was dissolved, so that the three railroads again operated independently. Hill was the president of the Great Northern Railway and Harriman controlled the
Union Pacific Railroad The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Paci ...
, two of the largest railroads in the U.S. Both sought control of the Burlington to connect their roads to the vital railroad hub of
Chicago, Illinois (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...
. Hill, who also had a minority interest in the
Northern Pacific Railway The Northern Pacific Railway was a transcontinental railroad that operated across the northern tier of the western United States, from Minnesota to the Pacific Northwest. It was approved by Congress in 1864 and given nearly of land grants, wh ...
, outbid Harriman for the Burlington, by agreeing to Burlington President Charles Elliott Perkins's $200-a-share price. Together, the Great Northern and the Northern Pacific assumed control of nearly 100 percent of the Burlington's outstanding stock. Knowing that the Northern Pacific controlled almost 49.3 percent of the Burlington's stock, Harriman launched a stock raid against the Northern Pacific. Control of the Northern Pacific would allow him to appoint directors to the Burlington, which could then be forced to treat Harriman's Union Pacific favorably in business matters. Harriman's stock raid in May 1901 led to the "Northern Pacific Corner". Speculators had sold shares that they did not own, and were now desperate to purchase shares at any price-some shares reportedly sold at $1,000. Hill, working with J.P. Morgan, took majority control of the Northern Pacific despite Harriman's best efforts. This speculation resonated throughout the stock market and the country as a whole. The two men, their backers, and associates agreed to settle their differences and eliminate ruinous competition through a monopolistic combination. The Northern Securities Company was formed by Hill to control the stock of his major railroad properties. Some of Harriman's directors were appointed as representatives for his holdings of Northern Pacific shares. A public outcry over the new company made its way throughout the country, and both state and federal officials prepared to file litigation. On February 19, 1902, the
United States Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United Stat ...
announced plans to file a suit against the company. When approached by J. P. Morgan to settle the issue in private, President Roosevelt refused; he later remarked, "Mr. Morgan could not help regarding me as a big rival operator who either intended to ruin all his interests or could be induced to come to an agreement to ruin none." Although Roosevelt still believed that trusts were not always bad for society, he could not bear to feel treated as just another rival operator. The suit continued. The Justice Department won the suit and the company was dissolved according to the 1904 Supreme Court ruling in ''
Northern Securities Co. v. United States ''Northern Securities Co. v. United States'', 193 U.S. 197 (1904), was a case heard by the U.S. Supreme Court in 1903. The Court ruled 5-4 against the stockholders of the Great Northern and Northern Pacific railroad companies, which had essential ...
'' case, decided five to four. The companies were convicted under the
Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. ...
. In the following seven years, 44 other Federal antitrust cases turned out rulings similar to the ''Northern Securities'' case. Included in these break-ups were Harriman's own holdings of the Union Pacific and Southern Pacific railroads. The ''Northern Securities'' case was one of the earliest antitrust cases and provided important legal precedents for many later cases, including that against
Major League Baseball Major League Baseball (MLB) is a professional baseball organization and the oldest major professional sports league in the world. MLB is composed of 30 total teams, divided equally between the National League (NL) and the American League (A ...
. In 1955, the Northern Pacific and Great Northern renewed talks of merging. The Supreme Court approved the merger, and as a result, the Great Northern, Northern Pacific, Chicago Burlington & Quincy, and the Spokane, Portland and Seattle Railway merged on March 2, 1970, to form the
Burlington Northern Railroad The Burlington Northern Railroad was a United States-based railroad company formed from a merger of four major U.S. railroads. Burlington Northern operated between 1970 and 1996. Its historical lineage begins in the earliest days of railroadi ...
.


References


Further reading

* Brown, R. Blake, and Bruce A. Kimball. "When Holmes Borrowed from Langdell: The" Ultra Legal" Formalism and Public Policy of Northern Securities (1904)." ''The American Journal of Legal History'' (2001): 278-321
in JSTOR
*Bryant, Keith L., Jr., Editor. ''Encyclopedia of American Business History and Biography, Railroads in the Twentieth Century.'' New York: Facts on File, 1990. *Frey, Robert L., Editor. ''Encyclopedia of American Business History and Biography, Railroads in the Nineteenth Century.'' New York: Facts on File, 1988. * Haeg, Larry. ''Harriman vs. Hill: Wall Street's Great Railroad War'' (2013) * Hidy, Ralph W., et al. ''The Great Northern Railway, A History.'' (Boston: Harvard Business School Press, 1988) *Klein, Maury. ''The Life and Legend of E.H. Harriman.'' (U of North Carolina Press, 2000
online
*Martin, Albro. ''James J. Hill and the Opening of the Northwest.'' (Oxford University Press, 1976) *{{cite book , title=Bulletin of the University of Wisconsin, No. 142: History of the Northern Securities Case , id=
other link
, last=Meyer , first=Balthasar Henry , author-link=Balthasar H. Meyer , year=1906 , publisher=University of Wisconsin , location=Madison , url=https://books.google.com/books?id=4gfnAAAAMAAJ * Prager, Robin A. "The effects of horizontal mergers on competition: The case of the Northern Securities Company." ''The RAND Journal of Economics'' (1992): 123–133. * Randolph, Carman F. "Considerations on the State Corporation in Federal and Interstate Relations. The Northern Securities Cases." ''Columbia Law Review'' 3.3 (1903): 168–197
in JSTOR
* Stigler, George J. "Monopoly and oligopoly by merger." ''American Economic Review'' (1950): 23–34.
in JSTOR
* Strouse, Jean. ''Morgan: American Financier'' (1999) pp 418–34.


Primary sources

*The Northern Securities Decisio

''Northern Securities Co. v. United States'' at Cornell Law School's Supreme Court Collection. Chicago, Burlington and Quincy Railroad subsidiaries Great Northern Railway (U.S.) subsidiaries Northern Pacific Railway subsidiaries Progressive Era in the United States