Northern Securities Company
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The Northern Securities Company was a large railroad trust formed in 1902 by financiers 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, and other associated lines. The conglomerate was sued under the Sherman Antitrust Act of 1890 by President Theodore Roosevelt, one of the first cases filed against corporate interests instead of labor. [1]
James J. Hill and E. H. Harriman, owners of the Union Pacific Railroad and Great Northern Railway, respectively, battled over Northwestern rail lines in 1901. In a series of maneuvers to capture control of each others' stock, the contest set off speculation that resonated throughout the market and the country as a whole. With a stalemate in sight, the two men, their backers, and associates agreed to settle their differences and instead form the desired monopoly though a trust. The Northern Securities Company was formed.
A public outcry over the new company made its way throughout the country, and both state and federal officials prepared to file litigation. On February 19, 1902, the United States Department of Justice announced plans to file a suit against the company on the behalf of President Theodore Roosevelt. When approached by J. P. Morgan to settle the issue in private, Theodore Roosevelt later remarked, "Mr. Morgan could not help regarding me as a big rival operator who either intended to ruin all his interests or could be induced to come to an agreement to ruin none." [2] While Roosevelt still considered that trusts were not always bad for society, he could not bear to feel treated as just another rival operator. The suit continued.
After vigorous federal prosecution, the company was dissolved according to the 1904 Supreme Court ruling in the Northern Securities case, five to four. The companies were convicted under the Sherman Antitrust Act, overturning the previous decision of United States v. E. C. Knight Co. In that case, the Court ruled that the Sherman Antitrust Act was insufficient in regulating that monopoly. In the following 7 years, 44 other cases turned out rulings similar to the Northern Securities case. The Northern Securities case was one of the earliest and most important antitrust cases and provided important legal precedents for many later cases, including that against Major League Baseball.
In 1970, the three main railroads merged together with Spokane, Portland and Seattle Railway to form Burlington Northern Railroad.
