Show Tfl PRFVENT P J H MERGER E 1 Bil Filed in U S Circuit Court St Paul INJUNCTION PRAYED FOR I Proceedings Instituted Under Direction S Direc-tion of the AttorneyGeneral of tho United States Object Is to Test tho 5 legality of tho Alleged Combination Combina-tion of the Northern Pacific and Great Northern Railways and Northern Securities Company History His-tory of Matter at Issue Set Forth St Paul Minn March 10The Gov crnments attack on the S 460000000 I Northern Securities company repre entng the merger or the Northern Pacific and the Great Northern railroads rail-roads was begun today by a bill for Injunction In-junction med here In the Circuit Court of the United States The suit is Instituted in the name ot the United States and against the Northern Securities company the merged railroads of J Plerpont Moran Mor-an James J Hill and all the directors olllcers and stockholders of the three companies involved and seeks perpetually per-petually to restrain them from carrying carry-ing out the purpose of the New Jersey corporation Action is brought in accordance with the provisions of the Sherman Anti Trust act passed July 2 1SOO which it is said to violate and It Is sought rto have the merger of the Northern broads declared an unlawful combination combina-tion and conspiracy In restraint of trade i The petition In the case is signed by Milton D Purdy District Attorney for Minnesota and by Philander C Knox fAUorneyGencral 1Unnerl and John K Richards Rich-ards SolicitorGeneral of the United States FACTS RECITED After reciting the act that tho Northern v North-ern Securities company Is a corporation er organised under the laws of the State of New Jersey that tho Great Northern railway WHS organized under the laws of the State of Minnesota and the Northern lnnc rPacIflc under the laws of tho State of Wisconsin t and that the two last named > companies aro common carriers doing an Interstate business and that these companies com-panies at and prior to the doing of tho acts complained of owned and operated two separate Independent parallel and competing lines of railway aggregating over 5 miles In length the petition gocs ton to My WERE COMPETING LINES L They were theQnb tmngcontlnQjital fifties of wt tlcQnb d1r trnnSQntn tHo I K northern tier of Stnts west of the Great I I Lakes from the Great Lakes and tho Mississippi river to thc Pacific ocean andre and-re then encaged In act competition With one another for freight and pas aenger traffic among the several States lcngel trfc atong of the United States and between such fj Slates and foreign countries each system connecting at Us eastern terminus not only with lines of railway hut with lake and river steamers to other States and to foreign countries and at Us western terminals with sea olnp vc > sHs to other 1State TerrItorIes and possessions of tho United States and to foreign countries S FORMER DEAL CITED S i That prior to the year 1SS3 the Northern Pacific system was owned and operated p by the Northern Pacific Railway company com-pany a corporation organized under ccr tnln acts of Congress that during that year tho company bcrnmo insolvent and was placed In the hands of r receiver While In this condition awaiting foreclosure fore-closure and sale an arrangement was entered en-tered Into between a majority of tho bondholders o the Northern Pacific Railway Rail-way company and the Great Northern Railway company for a virtual conHoIl Si datlon of tho two nnd placing the control of the Northern Pacific system In the bMiands of tho Great Northern This arrangement K ar-rangement contemplated tho foreclosure s of the Northern Pacific to a committee p of bondholders who should organize anew fe a-new corporation to bo known as the Northern Pacific Railway company One half of the capital stock of the new company l com-pany was turned over to the Great Northern North-ern company which In turn was to guarantee guar-antee the bonds of tho Northern Pacific f f Railway company DEFEATED BY SUPREME COURT The carrying out of this arrangement cays Iho petition won defeated by the decision of the United States Supreme court In the caao of Pcarsall against thor tho-r Great Northern Railway company which was decided March 30 1S9G In which itS it-S was held that tho practical effect would jbc tho Consolidation of two parallel and I competing lines o railway and the giving rto tho defendant the Great Northern Railway company a monopoly of all traffic In the northern half of the State V of Minnesota ns vcll as of nil trnns conUnental traffic north of tho lines of the Union Pacific to the detriment of the public and la I violation of the laws of tho Stato of Minnesota PURCHASE OF BURLINGTON Eaily in the yeay of 1001 the defendants t defend-ants the Great Northern and Northern Pacific Railway compnnlcB In contom plallon of the ultimate placing of the oit 1Iclng r Great Northern rind Northern Pacific syn t 5 terns under n common source of control 5 united in purchaso of tho total capital stole of lie Chicago UurllnKton Quincy Railway company of Illinois giving giv-ing the Joint bonds of the Great Northern North-ern and Northern Pacific Railway com panics In thlw manner tho Great Northern 1 North-ern and Northern Pacific Railway companies c com-panies secured control of tho vast system of llnoa known as the Burlington system about HM miles In lengthS length-S UNLAWFUL COMBINATION The attempt to turn over a controlling 5 n cntrolng Interest of tho Northern Pacific Railway company to tho Great Northern having thus In tho year IBM been haJIS decision o the Supreme court the do a fendants James J Hill and his associate associ-ate stockholder of the Great Northern owning or controlling a mtljorltv of Its stock and Iho defendants J Picrpont Morgan and his associates owning or controlling i majority of the stock of tho Northern Pacific company entered Into an unlawful combination or conspiracy con-spiracy to effect a virtual consolidation consoldaton of the Northern Pacific and Great Northern North-ern tystcms and to place restraint upon Sc all competitive Interstate and foreign r trade or commerce carried on by them and to monopolize or attempt to monopo I lize the same and to suppress the com petition therefore existing between said ranwa systems In waine Interstate and foreign trade or commerce through tho Instrumentality and by tho means tel lowing toWJA hOlding corporationS corporation-S to b called the Northern Securities com lam Was to ho formed under the law o New Jersey with a capital > stock of JICOWOOOO to which In IOOOO exchange for Its own capital Mock upon t certain basis nnd at a certain rale Was to bo turned r over and tmunfcrred the capital tock I or I controlling interest In the capita steel of each ort the defendant cntlal eah heteCcnant railway rlwa J companion INDIVIDUAL STOCKHOLDERS In lh8 manner the Individual stock J holders of tho two indopufidoni and worn S petnc rallvi companies wero to bo SniSL 1 atici and u single common stocky stock-y holder the Northern Securities company a to bo substituted the Intvnrit tUbsLtutld Iltcrc4l or the individual MockholdoM In the erty and franchise of the two ratiway prop companies was to terminate b Inc thug converted Into an Interest In the prop arty and franchises and of the prop hffl 5 com al Tho Individual I sock holder of the Northern o thC Pacific company were no longer to hold an Interest In the property or draw their dividends from the Pacific system famines of the Northern pnclc und tho I Individual slDckholders of tho I Grout Northern Railway company were Rflwn no longer to hold an Interest In tho prop I lt 11011 orty or draw their dividends from the I earnings of the Great Northern system I nut having ceased to bo I stockholders In the railway companies and having become I stockholders In tho holding corporation both wore to draw their dividends from tho earnings of both yslpms collected and distributed by the holding corporation corpora-tion tionMONOPOLY ESTABLISHED In this manner by making tho stockholders holders of each system Jointly interested Inter-ested in both systems and by practically pooling the earnings of both systems for the benefit of the I former stockholders of each and by vesting the selection of ho directors and officers of each system In a common body towlt The holding corporation with not only the power but the duty to pursuo a policy which would romoto the Interests not of one system nl the expense of tho other but of both at tho expense of tho public nil Inducement Induce-ment for competition between tho twos two-s was to bo removed a virtual consolidation effected and a monopoly of o ho Interstate und foreign commerce formerly carried on by the two systems AS Independent competitors established NEW COMPANY FORMED In further pursuance of tho unlawful combination or conspiracy aforesaid and solely as an Instrumentality through which to effect tho purposes thereof on or about tho Hth day of November 1001 thn Northern Securities company was organized or-ganized by the election of a board of directors di-rectors and the selection of I president James J Hill and other officers who with their associate stockholders of tho Great Northern Railway company assigned as-signed and transferred to the Northern Securities company n large amount of capital stock of tho Great Northern Railway Rail-way company constituting a controlling controln1 merest therein and complainant believes n majority thereof I upon tho agreed basis of exchange of S par value of the capital capi-tal otock qf the Great Northern Railway company and the defendant J Pierpont Morgan and his associate stockholders of ho Northern Pacific Railway company assigned and transferred to defendant he Northern Securities company a largo majority of tho capital stock of tho Northern Pacific Railway company upon ho agreed basis of JUG par value of tho capital stock of tho Northern Securities company for each share of the capital stock of the Northern Pacific Railway company and thereafter the Northern securities company offered to tho stock joldors of tho defendant railway companies com-panies to Issue and exchange Us capital Block for the capital stock of such railway rail-way companies upon the basis of exchange ex-change aforesaid no other consideration being required The defendant the Northern Securities company has acquIred ac-quIred an additional amount of the stock oC the defendant Railway companies Issuing Is-suing In lieu thereof Its own stock on the basiN of exchange aforesaid and Is now holdIng as owner and proprietor substan lally all of the capital stock of the Northern Pacific Railway company ands and-s complainant believes a majOrity of ho capital stock of tho Great Northern Railway company CONSOLIDATION EFFECTED By reason thereof a virtual consollda lon under ono ownership and service of control the Great Northern and Northern Pacific railway systems have effected a combination or conspiracy In restraint of trade or commerce among tho several tales and with foreign nations formerly carried on by tho defendant railway companies Independently and In free com petition one with tho other has been formed and Is In operation and tho de endants aro thereby attempting to mo opollzc and have monopolized such Interstate In-terstate and foreign trade or commerce to tho great and Irreparablo damage of hapconlq Qft United States In dero gaTTon of their commorVT fgh ts nhd ln I > violation of the act of Congress of July 2 ISM entitled An Act to protect trade and commerce against unlawful restraints re-straints and monopolies STOCK WITHHELD J the defendant tho Northern Seciirl les company has not acquired a largo majority of the capital stock of the de endant the Great Northern Railway company It Is because the Individual de erdanls named and their associates In h1 combination or conspiracy Is charged In this poslllon or como of them since It became apparent that the legality of their corporate device for tho merger on ho Block of competing railroad lines through the Innlrumenlallly of a central or holding corporation would be assailed In the courts have purposely withheld or cause to be withheld I largo amount of ho capital stock of Bald railway com iany from transfer for the stock of the sorthcin Securities company and have urposely > discouraged and prevented the transfer and exchange of such stock lor tho stock of tho Northern Securities company all for the purpose of conceal l ng the real scope and object of tho unlawful un-lawful combination or conspiracy nnd of lecelvlng and misleading the State and Federal authorities and of furnishing aground a-ground for tl defense that tho Northern Securities company does not hold u clear najorltj of the stock of Iho Great Noith erit company OBJECT SECURITIES COMPANY The Northern Securities company wao not organized In good faith to purchase nnd pay for the stocks of the Great Northern and Northern Pacific companies com-panies I was organized solely to Incor Palate the pooling of tho slocks of tho Haiti companies and to carry Into effect the unlawful combination or conspiracy aforesaid The Northern Securities com lany la I a mero depository cuelortan lolder and irusteo for tho stocks of tho Great Northern and Northern Pacific companies and Its shares of stock aro but beneficial certificates Issued against said railroad stocks t designate the Interest of the holders In tho pool The Northern Securities company does not have nnd never had arty capital sufficient to warrant war-rant such a stupendous operation Its subscrIbed capital slock was but S30GOO and Its authorized capital stock of IW 010000 Is Just sufficient when all Issued to represent and cover the exchange value val-ue of subBlanllally the entire stock of tho Great Northern and Northern Pacific Railway companies upon tho basis and at the rte agreed upon which Is about S122000000 in excess of tho combined capital at capi-tal par stock of the two railway carl ALL ROADS MAY BE ABSORBED I the Government fails to prevent the carrying out of this combination or con nplraoy not only with a virtual consol dation of two competing transcontinental lines with tho practical pooling of their earnings be effected and a monopoly of tho Inlerstato and foreign commerce formerly for-merly carried on by them ns competitors bo created and br effective competition between such lines and carrying of Interstate Ilcs cnrrlnr torstato and foreign traffic be destroyed but thereafter to all desiring to usa it1 Ian I-an available method will be presftntud whereby through the corporate scheme or device aforesaid tho act of Congress of July f ISM may ho circumvented and set at naught and all transcontinental lines Indeed tho entire railway systems of the country may bo absorbed merged and consolidated thus placing the l public at tho absolute mercy of tho holding corporation corpor-ation ASKS PERPETUAL INJUNCTION Tho petition prays that tho Northern Securities company Its stockholders of ficcrs etc bo perpetually enjoined from purchasing voting etc any of tho purchasInG otll o shares of the capital stock of clther the Northern Pacific or Great Northern companies com-panies and that a mandatory Injunction may Isnuo requiring tho Northern Sccurl ties company to recall and cancel any certlficalc oiN alock issued by It In purchase pur-chase of or In exchange for any of tho pharos of tho capital stock of cither of the said railway companies surrendering In return therefor tho certificates of stock In the respective railway companies compa-nies In lieu of which they were issued It IB also auked that time defendants V the Northern Pacific and tho Great Northern Railway companca their officers stockholders stock-holders ctc bo perpetually enjoined from nJolnc In any manner recognizing Or accepting the Northern Securities company as the I owner or holder of any of the shares of their capital otock otc The p tUonl Is signed by Milton D Purdy attorney for the United States district ot Minnesota Philander C Knox AttorncyGeneral of tho United States and John K Richards Solicitor General of the United States |