Chapter 32

NOTABLE SUPREME COURT DECISIONS

[1907]

The Northern Securities Company is a corporation, formed under the laws of New Jersey, for the purpose of obtaining control of a majority of the stock of the Northern Pacific Railroad and part of the stock of the Great Northern Railroad. These roads, which parallel each other from Lake Superior to the Pacific, have been held by the courts, in the case of Pearsall vs. the Great Northern Railway, to be competing lines.

The organizers of the Northern Securities Company contended that their ultimate purpose in organizing the company was to control the two railway systems not for the purpose of suppressing competition, but to create and develop a volume of trade among the States of the Northwest and between the Orient and the United States by establishing and maintaining a permanent schedule of cheap transportation rates.

When the company had completed its organization and the full significance of the organization was known, the State of Minnesota instituted proceedings against the company in the State courts. Later the case was transferred to the federal Circuit Court and eventually carried to the Supreme Court of the United States, where the contentions of the State were overruled.

In March, 1902, a suit was instituted by the United States in the Circuit Court of the eighth federal district. The judges who sat upon the case decided unanimously that the acquisition of the stock of the Northern Pacific and the Great Northern Railways by the Securities Company was a combination for the restraint of trade among the States, and therefore a violation of the Sherman act. A decree was issued by the court prohibiting the company from acquiring any more of the stock of these roads and from exercising any control over either of the roads in question.