RAILROADS INVOLVED IN THE NORTHERN SECURITIES CORPORATION The object of its organization, according to James J. Hill, was to secure permanent protection for a group of aged stockholders form such a company, some of the ablest lawyers in the country were set to work on the preliminaries. From the beginning, the essentials of it were agreed upon without serious difference of opinion. The plan, Mr. Hill said, was practically determined by Mr. Kennedy, Mr. George Baker, Mr. James, Mr. Thorne, Mr. Clough, Mr. Perkins, and himself. Mr. Hill has given in his own words the explanation of the general lines followed: "We were particularly anxious to put a majority of that stock where it could not be raided again as it had been. We wanted to put it in a corporation that was not a railroad company-a company that would hold it as an investment, and the larger the company the more difficult it would be to secure a majority of it. Then, again, a reason why we preferred an investment company: railroad charters, I think I may say almost entirely, are drawn or granted on terms that do not permit railroad companies to buy the shares or own the shares of investment companies. Railway companies, under certain conditions, can buy the shares of other railways, as a means of consolidation, or they might buy the shares of a road that they would otherwise build. We were advised that we would be safer with the shares held by an investment company, the stock of which could only be held by individuals or by corporations that were not railway companies, and to that extent we would be more free from such raids by interests that were anxious to destroy or restrict the growth of this country-such raids as had been made by the Union Pacific interest, socalled." MORGAN'S CONFIDENCE IN HILL For the sake of clearness, let it be repeated that the original idea of making a holding company had no reference to the Northern Pacific at all. It was entertained by Mr. Hill before the reorganization of the Northern Pacific. Now, the whole position and all the elements of the problem were changed. In view of the relations established with Northern Pacific and their joint interest in the Burlington, such a holding concern for the Great Northern alone would have been absurd. All the closely allied interests must join. They desired to. In the consultations held, Mr. Perkins represented the Morgan interests. Referring to this, Mr. Morgan not only cleared the air of gossip about internal machinations, but paid to Mr. Hill the highest tribute he could give. "I would have given him all my Great Northern stock. He could have done what he liked with that, because I had confidence in him and he had confidence in me. It is not a coterie or anything of that kind." On the 13th of November, 1901, the Northern Securities Company was incorporated. The charter was taken out in New Jersey, whose laws were supposed to be most friendly to this kind of undertaking. It differed from that of most other great corporations formed in this epoch particularly in the fact that its powers were severely limited. The custom was to provide against every contingency by authorizing each of the big, new corporations now being spawned so rapidly to conduct practically any business in which it might conceivably wish to engage. The charter of the Northern Securities confined its activity "to the acquisition of valuable paper held by domestic and foreign corporations, exercising the rights of property over the same, aiding corporations whose paper is thus held, and acquiring and holding the necessary real and personal property." Its authorized capital stock was $400,000,000. At first a much smaller capitalization was contemplated. But neither Mr. Hill nor Mr. Morgan was willing that any one should ever be able to accuse him of sharing in a profitable venture from which others were excluded. Mr. Hill had a lifelong reputation for working for his stockholders all the time. If there was any conflict of interests, his must suffer rather than theirs. But if only those were admitted whose age and long connection with the company had inspired the project, and if it were a financial success, people would not be lacking to stigmatize it as the plan of a chosen few on the inside to make some money for themselves. He said: "I had the feeling that we would give each shareholder the opportunity to come in at the price we put our own in, if he desired. If he preferred to stay out, that was his privilege." Mr. Morgan took the same position. Adherence to that principle necessitated a capital stock at least as large as that of the Great Northern and the Northern Pacific combined. The authorized share capital of the two was at this time $280,000,000. Of course, an exchange at above par would raise this limit. Other interests also would want to be admitted from time to time. Abo. 76 per cent. of Great Northern stock w exchanged for the new security at the ratof $180 for each $100 turned in. Mr. H had suggested this basis, which was ap proved by all. About 96 per cent. d Northern Pacific came in on the basis di $115 for $100. The Union Pacific peopl were admitted, for a lasting harmony was desired, and surrendered to the Norther Securities the holdings of Northern Pacific which they had acquired in the fight for possession, receiving in exchange about $82,500,000 of its stock. The first board of directors consisted of fifteen men. Six represented Northern Pacific interests four Great Northern, three Union Pacific, and two were what might be called "at large." The presidency was unanimously conferred upon Mr. Hill. MINNESOTA BRINGS SUIT On January 7, 1902, the state of Minne sota attacked the company in the Supreme Court of the United States. Denied there permission to file a bill of complaint, it brought suit in the state court. In the meantime the Federal Interstate Commerce Commission had, at a meeting on December 20, 1901, adopted a resolution calling for an investigation by it into "consolidation and combinations of carriers," including "the community of interest" plan; and, on February 19, 1902, the Attorney-General of the United States announced that, complying with a previous request of President Roosevelt, he had given it as his opinion that the "merger," as the Northern Securities was called. violated the provisions of the Sherman Act of 1890. Thereupon, on March 10th. suit was brought in the United States Circuit Court of St. Paul against the Northern Securities, Great Northern, and Northern Pacific. These two cases resulted in two dif ferent decisions by Circuit courts, before the Supreme Court of the United States was reached. The first, which was rendered by a tribunal made up of four Circuit judges, found that "the Securities Com pany accomplishes the object which Con gress has declared illegal perhaps more effectually than other forms of combina tion generally known in 1890 when the Anti-Trust Law was passed." It said that, although the motives which inspired the combination might have been "wholly laudable and unselfish," although it was "the initial and the necessary step in the accomplishment of great designs," the only question before the court was whether or not it constituted a combination having power to "suppress competition between two or more competing and parallel lines of railroad engaged in interstate commerce." This question the judges answered in the affirmative. The Northern Securities was enjoined from voting stock, acquiring additional stock, paying dividends, or exercising corporate control. The return of stock held by it to persons holding Northern Securities shares in exchange for shares deposited was permitted. In the state case the United States Circuit Court found that the formation of the Northern Securities did not involve any act or contract in restraint of trade. The real distinction between the two was that while the one court decided that the purchase of a majority of shares in the two companies by a single interest was illegal, the other held that the mere possession of power does not warrant an assumption that such power will be used criminally. This distinction represents the vital point in the case, and really presents the issue on which its determination would finally rest. THE SUPREME COURT ORDERS DISSOLUTION Both these cases now went up to the Supreme Court, where they were argued by the best legal ability in the United States. It would be tedious to follow here the conduct of the case, whose importance now is in its relation to the life and work of Mr. Hill. The opinion of the trial court of four justices was sustained by a decision given on March 14, 1904, by the casting vote of a single justice. The Northern Securities Company was ordered to dissolve. checkmate to one of his plans than as a denial of what were to his mind unchangeable principles. He never believed, at this time or later, that the Sherman AntiTrust Act was intended to apply to railroad corporations. He never accepted the rule that the power to act unjustly is equivalent to the commission of an unjust act. This decision, of course, created an immense stir and much excitement in the stock market. It required a readjustment from which came more litigation. Eight days after it was rendered Mr. Hill sent out a circular announcing the approaching dissolution of the Northern Securities Company and the distribution of its assets. This circular noted that since the formation of the company the railroads included had extended and improved their facilities, while the rates paid by the public had been materially reduced. It once more declared that the buying of Northern Pacific and Great Northern shares was done "in the full belief that such purchases were in no wise obnoxious to any law of the United States." Since, however, the Court thought otherwise, the company would proceed to comply fully and promptly with its decree. Therefore, 99 per cent. of its capital stock outstanding was called in and canceled. THE BASIS OF DISTRIBUTION Immediately there arose a question. precipitating a legal struggle on lines similar to the fight for stock control of the Northern Pacific which followed the Burlington purchase. What should the holders of Northern Securities shares receive in exchange for them? Would they get back exactly the same number of shares in the same corporations that they originally deposited, or only their portion of a ratable distribution of all the assets? Mr. Hill and his friends proposed the latter. For each share of Northern Securities surrendered there was to be delivered to the holder $39.27 stock of the Northern Pacific Until the Court's decision was made and $30.17 of the Great Northern. To public, Mr. Hill entertained no doubt that ratify this plan a special stockholders' it would be favorable. It was a bitter sur- meeting was held April 21, 1904. At this prise and disillusionment. That it was meeting about 75 per cent. of the stock adverse struck him no more severely as a was voted for the plan. The Harriman interests had already protested against the proposed scheme of distribution. They had from the beginning been holders of more than $82,000,000 of the stock. This they had received in exchange for the Northern Pacific shares turned in by them in 1901. As they had attempted, in May of that year, to control the Northern Pacific by purchase, so they now attempted to reach the same end by overthrowing the plan of pro rata distribution, and having returned to them, share for share, the stock of that company that they had originally put in. HILL ON HARRIMAN On April 2, 1904, the Harriman interests had taken legal measures to enjoin the carrying out of the plan announced. Let Mr. Hill tell some of the preliminaries, in a letter to a trusted friend, where he can give full vent to his honest indignation: "Before closing let me again refer to their statement that they only wanted protection for the Union Pacific. Mr. Harriman was the first director of the Northern Securities Company to whom I went after the decision of the Supreme Court to consult as to how we should dissolve the company, and he immediately said the only thing we could do was a pro rata distribution. This he repeated on several occasions for four or five days, and at the end of that time came to my rooms to tell me that he was afraid he could not carry it out, and the next day he wrote me a personal letter to the same effect, after he had assured me that we would have their full coöperation, and, in the meantime, having had his own counsel present with the Northern Securities counsel in consultation as to the legal steps to be taken; and his counsel agreed fully and said that it was the only legal and moral course that could be pursued under the circumstances. Within ten days from that time they brought the present suit, giving as the reason: 'We know, of course, that Mr. Hill wanted the control of the Northern Pacific, and it would be a great property in his hands, but we wanted to get control of it if we could and we are going to make the effort, because to make the effort would only cost us the lawsuit.' In which case the Great Northern would be hemmed in along the northern boundary without any outlet anywhere except on terms to be made for it, and our property would follow the course of the Alton and other roads like it which were lacking in foresight to protect themselves against what might occur in future." The Circuit Court unanimously denied the application to intervene. Then came more litigation, whose purpose was the same and whose devious course and voluminous record need not be considered here. An injunction against the distribution plan adopted was granted, and through the usual tortuous legal channels this secondary and final question as to the partition of the estate of the Northern Securities reached the Supreme Court. All the courts, Circuit, Circuit Court of Appeals, and Supreme Court, held for Mr. Hill. The decision of the last mentioned. unanimously rendered March 6, 1905. in which the plan of the Northern Securities Company for distributing the stock held by it was sustained in every important particular, put a quietus on the trouble makers. It was now free to execute its plan for dissolution, and did so. That Mr. Hill, after the pressure of these years of contest in the courts, neither felt an enduring animosity nor permitted rancor to distort his views or change his attitude toward others is shown in a striking way by a personal letter written two months after the court had spoken its last word. Coming from a man of stern temper and thwarted purpose, who had all along believed and still believed himself right in principle, and who had been opposed at every turn, it is a really notable utterance: "I have told all the Union Pacific people that we should let the past be cast aside, and take every proposition between the two or three systems without any prejudice and consider all interests fairly and honestly, and have peace by each company. regarding at all times the rights of all the others. Where there is a disposition to 1 agree on fair terms there should be no difficulty in securing harmony; and this can only be done where there is no right or disposition to encroach upon or invade each other." i A SAFE STEP LADDER The support on the side renders the danger of the ladder overturning and other like accidents almost negligible FOR SAMPLING GRAIN AND SEED A machine designed to secure reliable samples of grain or seed which can also be used for blending unlike materials ladder is not in use, and extended outward when in use, thus forming a tripod which cannot easily be overturned, thereby giving a feeling of security to the person mounted upon it. A GRAIN SAMPLING MACHINE USING SING only the power of gravity, a machine has been constructed which permits grain and seed dealers or laboratory workers to secure reliable samples from large portions of the material to be examined. It can also be used for mixing or blending two or more strains of unlike material, and furthermore a sample can be divided so that one half can be used for testing and grading and the other half turned over to the seller or buyer or retained for future reference. The device is simple, consisting of a hopper held in position over a cone which is provided at its base with a series of ducts with uniform spaces between them. Adjusted to the bottom of the ducts is a funnel with a spout at its bottom part. The ducts con |