Northern Securities Co. v. United States
Encyclopedia
Northern Securities Co. v. United States, 193 U.S. 197
(1904), was an important ruling by the U.S. Supreme Court
. The Court ruled 5 to 4 against the stockholders of the Great Northern and Northern Pacific
railroad companies, who had essentially formed a monopoly
, and to dissolve the Northern Securities Company
.
and attempted to take over the Chicago, Burlington and Quincy Railroad
(CB&Q). Hill's strategy was for his railroad and Morgan's Northern Pacific Railway
to jointly buy the CB&Q. However, Edward Henry Harriman, president of the Union Pacific Railroad
and the Southern Pacific Railroad, also wanted to buy the Chicago, Burlington and Quincy. Harriman demanded a one-third interest in the CB&Q, but Hill refused him. Harriman then began to buy up Northern Pacific's stock, forcing Hill and Morgan to counter by purchasing more stock as well. Northern Pacific's stock price skyrocketed, and the artificially high stock threatened to cause a crash on the New York Stock Exchange
. Hill and Morgan were ultimately successful in obtaining more Northern Pacific stock than Harriman, and won control not only of the Northern Pacific but also the Chicago, Burlington and Quincy.
Alarmed by Harriman's actions, Hill created a holding company—the Northern Securities Company
—to control all three of the railroads. The public was greatly alarmed by the formation of Northern Securities, which threatened to become the largest company in the world and monopolize railroad traffice in the western United States. President William McKinley
, however, was not willing to pursue antitrust
litigation against Hill. McKinley was assassinated, however, and his progressive
Vice President, Theodore Roosevelt
, ordered the United States Department of Justice
to pursue a case against Northern Securities.
.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1904), was an important ruling by the U.S. Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
. The Court ruled 5 to 4 against the stockholders of the Great Northern and Northern Pacific
Northern Pacific Railway
The Northern Pacific Railway was a railway that operated in the west along the Canadian border of the United States. Construction began in 1870 and the main line opened all the way from the Great Lakes to the Pacific when former president Ulysses S. Grant drove in the final "golden spike" in...
railroad companies, who had essentially formed a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
, and to dissolve the Northern Securities Company
Northern Securities Company
The Northern Securities Company was an important United States railroad trust formed in 1902 by E. H. Harriman, James J. Hill, J.P. Morgan, J. D. Rockefeller, and their associates. The company controlled the Northern Pacific Railway, Great Northern Railway, Chicago, Burlington and Quincy Railroad,...
.
Facts
In 1901, James Jerome Hill, president of and the largest stockholder in the Great Northern Railway, won the financial support of J. P. MorganJ. P. Morgan
John Pierpont Morgan was an American financier, banker and art collector who dominated corporate finance and industrial consolidation during his time. In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric...
and attempted to take over the Chicago, Burlington and Quincy Railroad
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 or as the Q, the Burlington Route served a large area, including extensive trackage in the states of Colorado, Illinois, Iowa, Kentucky, Missouri,...
(CB&Q). Hill's strategy was for his railroad and Morgan's Northern Pacific Railway
Northern Pacific Railway
The Northern Pacific Railway was a railway that operated in the west along the Canadian border of the United States. Construction began in 1870 and the main line opened all the way from the Great Lakes to the Pacific when former president Ulysses S. Grant drove in the final "golden spike" in...
to jointly buy the CB&Q. However, Edward Henry Harriman, president of the Union Pacific Railroad
Union Pacific Railroad
The Union Pacific Railroad , headquartered in Omaha, Nebraska, is the largest railroad network in the United States. James R. Young is president, CEO and Chairman....
and the Southern Pacific Railroad, also wanted to buy the Chicago, Burlington and Quincy. Harriman demanded a one-third interest in the CB&Q, but Hill refused him. Harriman then began to buy up Northern Pacific's stock, forcing Hill and Morgan to counter by purchasing more stock as well. Northern Pacific's stock price skyrocketed, and the artificially high stock threatened to cause a crash on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
. Hill and Morgan were ultimately successful in obtaining more Northern Pacific stock than Harriman, and won control not only of the Northern Pacific but also the Chicago, Burlington and Quincy.
Alarmed by Harriman's actions, Hill created a holding company—the Northern Securities Company
Northern Securities Company
The Northern Securities Company was an important United States railroad trust formed in 1902 by E. H. Harriman, James J. Hill, J.P. Morgan, J. D. Rockefeller, and their associates. The company controlled the Northern Pacific Railway, Great Northern Railway, Chicago, Burlington and Quincy Railroad,...
—to control all three of the railroads. The public was greatly alarmed by the formation of Northern Securities, which threatened to become the largest company in the world and monopolize railroad traffice in the western United States. President William McKinley
William McKinley
William McKinley, Jr. was the 25th President of the United States . He is best known for winning fiercely fought elections, while supporting the gold standard and high tariffs; he succeeded in forging a Republican coalition that for the most part dominated national politics until the 1930s...
, however, was not willing to pursue antitrust
Sherman Antitrust Act
The Sherman Antitrust Act requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by...
litigation against Hill. McKinley was assassinated, however, and his progressive
Progressivism
Progressivism is an umbrella term for a political ideology advocating or favoring social, political, and economic reform or changes. Progressivism is often viewed by some conservatives, constitutionalists, and libertarians to be in opposition to conservative or reactionary ideologies.The...
Vice President, Theodore Roosevelt
Theodore Roosevelt
Theodore "Teddy" Roosevelt was the 26th President of the United States . He is noted for his exuberant personality, range of interests and achievements, and his leadership of the Progressive Movement, as well as his "cowboy" persona and robust masculinity...
, ordered the United States Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
to pursue a case against Northern Securities.
.