V WH "
The Commoner,
VOLUME 4, NUMBER 10,
14
8
E6e NORTHERN SECURITIES DECISION
Uy a volo of five to four, the
United States supremo court, on
March 14, decided that the Northern
Securities merger is in violation of tne
unti-trust law,
Justico Harlan delivered the opinion Lng coml)any who will permit competi
r,. n,o n.nWItv nf LllO COUrt. Which
majority comprised Justices Harlan,
Brown, Brewer, McKonna and Day.
While Justice Brewer was one of the
majority, he took occasion to say that
he did not entirely ngree with ovciy
point uppn "which the majority reached
J La conclusion.
I ho minority was composed of Chief
Justice Fuller and Justices White,
Pccklmm and Holmes.
Tho opinion delivered by Justico
Harlan completely ailirms tho lower
court and directs it to make such or
ders as the circumstances may re
ouiro. Tho result is that Messrs. Hill
aic Morgan must find some other
method than the Northern Securities
cimpany to avoid tho law.
Tho several opinions delivered in
this case are briefed by the Chicago
Record-Herald as follows:
After reviewing thoallegations of
tho government in tho merger case and
tho defonso of the Northern Securities
company, Justice Harlan practically
indicated the decision of the supremo
court in tho first sentence of tho opin
ion! Ho said:
"In our judgment the ovidence fully
sustains the material allegations uf
ttif bill, and shows a violation of ti.e
act of congress, in so far as it declares
illegal overy combination or consi ir
a".y in restraint of commerce among
the sevoral states and with foreign na
tions, and forbids attempts to monop
olize such commerce."
' Ho again recurred to tho facts in the
caso and said that, laying aside any
minor things, it was indisputable that
upon tho principal facts of the recoiJ
under tho leadership of Hill and Mor
gan, the stockholders of tho two rail
road companies, having practically
parallel lines of road, had combined
two old companies are now united in
their interest in preventing all compe
tition between the two. He added:
"They would take care that no pei
sons are chosen directors of the hoid-
tion between the constituent compa
nies, the result being that all tne earn
ings of the constituent companies
make a common fund in the hands of
the securities company upon the basis
of the certificates of stock issued by
the holding company. No scheme or
device could more certainly come -within
the words of tho act 'combination
in tho form of a trust or otherwise in
restraint of commerce among the
states or with foreign nations, or
could more effectively and certainly
suppress free competition between the
constituent companies. This combina
tion is within tho meaning of the act
a 'trust,' but if not, it is a combination
in restraint of interstate and interna
tional commerce, and that, is enough
to bring it under the condemnation
of the act. The mere existence of such
a combination and the power acquired
by the holding company 'as trustee for
the combination constitute a menace
to and a restraint upon that freedom
of commerce which congress intended
to recognize and protect, and which
the public is entitled to have protect
ed. If not destroyed all the advant
ages that would naturally come to the
public under the operation of the gen
eral law of competition as between
the Great Northern and Northern Fa
ciflc Railway companies will be lost,
and the entire commerce of the im
mense territory in the northern pait
of the United States between the great
lakes and the Pacific at Puget Sound
would be at the mercy of a single
holding corporation, organized in a
state, distant from the people of that
territory."
He agreed with the summing up by
tho circuit court of the results of the
combination, which was that it places
tne control of the two roads in the
tt tirnahnrl naifle as scarcely worth
mentioning the contention on the part
of the securities company that tiio
question involved is the right of an in
dividual to dispose of his stock in a
state corporation, and that in such
transactions the individuals whose in
terests are involved are subject only
to the restraint of state laws.
Justice Harlan also referred to U10
argument that the position of the gov
ernment amounts to declaring that the
ownership of stock in a railroad cor-
company was in the nnhM c -
vestment, saying that there had hS
In conclusion he said
"The judgment of the court is tint
the decree below be and hereby tan?
firmed, with liberty to the circuit cciif
to proceed in the execution of its d
cree as the circumstances niav n
quire." J c
Justico Brewer expressed the opin
ion that some of the recent decislors
poration is in itself interstate com-' of tho court in anti-trust cases hnri
declara-rgono too far, and said:
merce and to other similar
tions, and he said:
"We do not understand that the gov
ernment makes any such contentions
or takes any such positions as thoGO
statements imply. It does not contend
that congress may control the mere
ownership of stock in a state corpora
tion, engaged in interstate commerce,
It does not contend that congress can
control the organization or mere ova
ership of state corporations, author
ized by their charters to engage in in
terstate and international commerce."
The opinion then takes up the right
of congress to enact such legislation
as the anti-trust law, and says:
"We say that congress has pre
scribed such a rule, because in all tho
prior cases in this court the anti-trusc
act has been construed as forbidding
any combination which by its neces
sary operation destroys or restricts
free competition among those engaged
in interstate commerce in other
words, that to destroy or restrict fiee
competition in interstate commerce
was to restrain such commerce. Nor
can this court, in reason, say that such
a rule is prohibited by the constitution
or is not one that congress could ap
propriately prescribe when exerting
its power under the commerce clause
of the constitution. Whether the free
operation of the normal laws of com
petition is a wise and wholesome rule
for trade and commerce is an ern-
nomic question which this court need
linrint. Hn loitr P -NTrv,,, ln.n. 1,.. ,. "" wu"' " "0 -" 1UUUH 1U IUO
ganSing a cuomVion 7 t e ho' L f .Lt' rT' ons V'juSuvknown? ST
.-!- , 0. .w w. v.ntw. . vi nnnl( !. ! 1 L In i i I H1U.V. QUI I H T11IO 1C1
i i ii ii i i i i i 11 u ii ill I'll i ii iru Ti r run r r-iriv-n - rm v a lavj -
pooling their earnings, notwithstand
ing both were engaged in interstate
traffic.
ceeding, ho sato:
"The stockholders of these two com-
tintlntr nrlY1nTl00 .1lnnnnni.mrl n nnl
ET rZTV , "V rJiTr --V"' Justice Harlan took ur, the eonten.
poared as stockholders of tho holding 3? th?i C?UM?J f2 Q Securities
company, which was thereafter to rr T'' " ua luc "UUIlurn &ecun
gaard tho interests of both sets of
stockholders as a unit, and to mau&oO
cr cause to be managed, both lines ci!
railroad as if held in one ownershlr.
Isecessarily by this combination or ar
rangement tho holding company in tf,e
fuicst sonBe dominates tho "sltuatio 1
iu tho interest of those who were
stockholders of tho constituent com
panies; as much so, for every practi
cal purpose, as if it had boon itself
a iailroad corporation which had built,
owned, and operated both lines for the
exclusive benefit of its stockholders.
Necessarily, also, tho constituent cocr-
panies ceased, under such a combina
tion, to bo in active competition ior
trade and commerce along their :c
spoctlvo linos, and have become prac
tically one powerful consolidated cor
poration, by the name of a holdirg
corporation, 'the principal, if not sole,
object for tho formation of which was
to carry out the purpose of tho original
combination under which competition
between the constituent companies
would cease."
He said that the stockholders of the
Your Nerves
Furnish the motive power of sthe en
tire body. Dr. Miles' Nervine will
keep the nerves strong and healthy
or restore their strength if weakened.
Bold on guarantee, Write for free book on
ucrvoua diseases.
' - Ck, MilsJ MiuhoaiCo., Elkhart, Ind,
ties company is a corporation, and as
iwb uuquisiiion oi tne stock of the
railroad companies is not consistent
with the powers conferred by its char
ter, the enforcement of the act of con
gress as against these corporations
will be in its operation an interfer
ence by the national government with
the internal commerce of the state
"vu"b muse corporations. He said-
TWlBi VlW deS n0t imPresS US.
MnCTesa haS IT SUpPOSe ihai
?!?? i d any PllrPOse to interfere
with the internal affair., nf m!!m'6
nor is there any ground whatever for
tho contention that the ami ,,! ,
roEulatoa tlml- .1 "l-.?11""18- "ct
. ...wi UUIllt'SI in !,-..,.
" --v vumuiuixe.
moro niwnoMv,, .-.
these days of enormous wealth than it
wCi woo ui any rormer period of our
history; indeed, that the time 1ms
come when the public needs to be pro
tected against the fivnoHrm f ..
f-iw Riding the power which at
tends the possession of unlimited capi-
!" f?tllIs as"lt may' congress has,
in effect recognized the rule of free
competition, when declaring illegal ev
ery combination or conspiracy in u
straint of interstate and intern aSona
gress tne public convenience or fim
general welfare will be best subset
when the natural laws of comnJm
are left undisturbed hv fh ncompetILion
is to remain a trovm.nm "!"! u thls
not of men." Ui iawa aud
Justice Harlnn ., ..
billtv nf f ::..r?uuuett tne
, .t , "u ourt to
ina-
view that the aVti-trust ot i , Uie
states. "Thp ponfonfi unue(
camea without r ofp V UL uu sus
Prior decision S Ct.OVGrruling the
scope and
act."
uy. its very terms, the act rom Z
onlv mmmnvnn n' .. Cl regulates
in the foreign stao,5 v?e States and
the oxniir.it. wnr ".lcsPected. by
that instrumfin; re, constitution
by congress in pmuance oMfaenacU?
sions, are thn c!, Ilce of "S provi-
the laws o ni wnBtltution or
uotwlthstandlnc'-l;,;; ' UlG contrary
states, over thf courtJ me, 0ver tbe
the people 0 f 11 T over
source of all power i,nltates' Lhe
cmmental system fnS?ep our 8v"
objects for whi th J8?Sct o the
ordained. . , ""jg.J11 institution was
less one of ts art ? a state, aim
stand in A,i ...n.rtlflc.lal creatures
" it wore othlS.?; enforcemen
a.ud its laws ,i" .TV00 Bovernmenh .ThBh VTtua.
t UVSlg5l at thoarSntl'rL0 as MUcl-
nniirf or. i. j.
y of tho a
f to buslS and 552; that Jl8a
lal ruin wouid foil MDroaa fln"n-
Ita provisions an7,the tton
iiiun virh oil uuu in
?nder that Z Tw ..PK?ed,?F cases
T,? Seen vepinSa..' mm' tbGy
1 stock by ttrs"
"Tnol-nfijl mA 1.1 Jll .. i j
luowuu ut uoiumg mat the anti
trust act included all contracts rea
sonable or unreasonable, in restraint
of interstate trade, the ruling should
have been that the contracts there
presented were in themselves unrea
sonable restraints of interstate trade
and therefore - within the scope of tre
act"
Justico Holmes, -in his dissenting
opinion contended that the anti-truot
statute is "'of a -criminal nature, and
said:
"It is in vain to insisc that this is
not a criminal proceeding. The woids
cannot be read one way in a suit
which is to end in fine and imprison
ment and another way in one whlcn
seeks an injunction. I am no friend of
artificial interpretations because tho
statute is of one kind rather than an
other, but all agree that before a stat
ute is to be taken to punish that
which always has been lawful it must
express its intent in clear words, ao
I say we must read -the words beforo
us as if the question were whether
two small exporting grocers should go
to jail."
Referring to the popular impression
concerning the intention of the anti
trust law, Justice Holmes said:
"There is a natural feeling that
somehow or other the statute meant
to strike at- combinations gieat
enough to cause just anxiety on the
part of those who love their country
more than money, while it viewed
such little ones as I have supposed
with just Indifference. This notion,
it may be said, somehow, breathes
from the pores of the act, although it
seems, to be contradicted in every way
by the words in detail. And it has
occurred, to me that it might be that
when a combination reached a certain
size it might have attributed to it
more of the character- of a monopoij,
merely by -virtue of its size, than
would be attributed to a smaller one.
I am quite clear that it is only in con
nection with monopolies that size
could play any part."
Justice White, In considering the
question of power, held that the point
at issue really was whether congres
sional supervision extends to the reg
ulation of the- ownership of stock &
railroads, which is, -fie said, not com
merce at all. He dwelt on the neces
sity for observing this distinction. He
announced his opinion to.be that stock
ownership in a state corporation can
not be said to. be in any sense traffic
between tile -.stages or intercourse be
tween them. Power to control l&8
ownership of interstate railroads w
contended necessarily would erahvace
their organization. .' "Hence It would
result," said the justice, "that
would bo in tho power of congress to
abrogate every such railroad cbarlw
granted by the state from the begin
ning if congress deemed that tw
rights conferred by such state cwp
ters tended to restrain commerce w
tween, the states or to create a monop
oly concerning the same." ,,
Ho held that by tho majority 0
ion congress could forbid tho organ
zatioh of all labor associations, AJJ
that the doctrine must in reason HJJ
to a 'concession of tho right in coj
tude, the .character .and capacity wl
Securities J Poraont.
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