The San Francisco Call. Newspaper, April 10, 1903, Page 4

THE SA FRANCISCO CALL, FRIDAY, APRIL 10, 1903 5 e DECISION GIVES WALL STREET'S SYNDICATE MANAGERS A SHOCK Checks Plans for Other Mergers Similar to That Invalidated by the Court. DECREE ENTERED BY THE COURT DECREE in favor of to the following effect: Adjudging that the stock of the Northern Pacific and Great hern companies, now held by the Securities Company, was rtue of a combination among the defendants in restraint d commerce among the several States, such as the anti-trust illegal; enjoining the Securities Company from acquir- 1g or attempting to acquire further stock of either of said companies; joining rom voting such stock ‘at any meeting of the stock- bolders of either of said railroad companies or exercising or attempting | to exercise any control, direction, supervision or influence over the acts | of said companies, or either of them, by virtue of its holding such | stock; enjoining the Northern Pacific and Great Northern companies,. | respectively, their officers, directors and agents from permitting such stock to be voted by the Northern Securities Company or any of its agents or attorneys on its behalf, at any corporate election for directors or officers of either of said companies, and likewise enjoining them m paying any dividends to the Securities Company on account of said tock or permitting or suffering the Securities Company to exercise any control whatsoever ovef the c orate acts of said companies or to | direct the policy of either, and, finally, permitting the Securities | Company to return and transfer to the stockholders of the Northern Pa- cific and Great Northern companies any shares of stock of those com- | panies which may have been received from such stockholders in ex- | change for its own stock or to e such transfer and assignment to. such person or persons as are now the holders and owners of its own stock originally issued in exchange for the stock of said companies. 1e United States will accordingly be entered Nor quire trade act denounces the exact amount e price agreed Securities Comp became a 1 devised by t » um_being nies at Wt o the United States Gov ern ratiways and t éirectors of the rument nd ha COMPETITI ON DESTROYED. was thus a single person, by virtue of I of the stock destroved every roads natura] g the carn mbinstion 3 being unab that migh »mmerce, deliberately emy eral import ae, in its opin every scheme that might ish that end ‘med ganized by corporations for the purpose 3 the manufacture of, or traffic in, vs icles and commoditles which ' wa wn and fully understood when the anti- was approved. Combinations in that ccordingly prohibited; but Con- dently anticipating that' a combina- be otherwise formed, was careful to & combination in any other form, restraint of interstate trade or com: or if it directly occasioned or af- such restraint, likewise should be i fllegal. Moreover, in the cases arising he act, it has been held by the highest uthority in the and its opi n reitefated fn no uncertain tone, to interstate carrlers of and passengers as well as to all other natural or artificial: that the words raint of trade or commerce” do not unreasonable or partial of rce, but any di aint nation, in Te An Easter Opportunity. e builc incompletion of our new g 104-110 Geary St., on ne. at is the reason we are open- Easter stock here. ing ‘Many Swell Shoes | de in latest model A ; stylish, graceful and comfort- able—the ones we expected to sell at the new store. I'hey’re as good as ycu can get anywhere for the same money. Better Shoe Value Is what we are striving to give. If you would call and let us show you a pair, you would believe any statement of ours in regard to their beauty 2ad strength. Some “short lots” reduced. ;| was | 11 | [ The new YORK, April 8. h been wait many months for | de m. In the ck market there was | | | 2 drop of one to five points in prices. So confident are the legal advisers of | the securities company that their position | is within the law and will be vindicated by the Supreme Court that no yl:\n other than the securities company has been dra in the Jand decides against them. In big banking houses and circles which | practic | pecial attention was given to that clause | in the decision which compels the North- | crn Securities Company to suspend divi- | denas forbids it to exercise any con- trol whatsoever over the corporate acts of the Northern FPacific or the Great Northern. In the opinlon of many authoritles this | portion of the decision was the most im- portant feature affecting the Northern Se- curities Company. It paralyzes the pow | of the company, | the holders of its securities, and dcals | a death blow to its operating efficiency. | 1t was evident that Wall street did not at first grasp full significance of the de cision. The fact that the decisfon was | unanimous and that there was not one | diesenting voice shattered the hopes of many interested in scores of important | deals among railroads which have been | held up pending a decision on this case | At one blow the court shattered the s es a Northern Securities Com- | pany In banking quarters It was declared, | howeve: t ultimately these dev ments would take place when a char formed through which the deals | could legally be carrled out. It was ihe general sentiment that the trend of com- bination and harmony of interests was | too strong to be divertea by the declsion. | If maintenance of rates and better busi- ness relations could not be through the formation of holding com- panies, then the same end would be at- ned in some other way. The conditions few vears ago, when the raflroads te these s the of were forced into bankruptey through cutting and ruivous competition, men said most positively would never come again. The fact that the controlling Intercsts in Wall street were prepared to support the stock market helped to establish a re- assuring sentiment in stock exchange cir- cles. Traders quickly realized that noth- ing fundamentally wrong had been estab- lished by the unfavorable decision and that the business of the country would proceed as usual, notwithstanding the de- cision. R RS S Y ) thereof; that an agreement between compet- ing roads which requires them to act in con- cert and fixes the rates for carriage of pas- sengers or freight over their respective lines from one State to another and which, by that means, restricts temporarily the right of any one of such carriers to name rates for the car- riage of such freight or passengers over its rond. as it pleases, is a contract in direct re- staint of commerce within the meaning of the act, in that it tends to prevent competition; that it matters not whether, while acting un- der such a contract, the rate fixed is reason. able or unreasonable, the voice of such a con: tract or combination being that It confer: powers to establish unreasonable rates and di- rectly restrains commerce by placing ob- #tacles in the way of free and unrestricted com- petition between carriers who are natural rivals for patronage; and, finally, that Congress has the power, under the grant of authority con- tained in Federal legislation to regulate com- merce, to say that no contract or combination shall be legal which shall restrain interstate trade or commerce by putting off the opera- tion of the general law of competition. ANTI-TRUST ACT VIOLATED. Taking the foregoing propositions for granted because they have been decided by a court whose authority is controliing, it is almost too gllln for argument that the defendants would ave violated the anti-trust act if they had done through the agency of natural persons what they have accomplished through an arti- al person of their own creation. That Is o if the same individuals who fyomoted the ®ecurities company, in pursuance of a previous understanding or agreement so to do, had transferred the stock in the two railroad com- panies to @ third party or parties and had agreed to Induce other shareholders to do like: ‘wise until a majority of the stock of both com- panies had been vested in & single individual o assoctation of individuals and had empowes the holder or holders to vote the stock as their own, recelve all the dividends therson and pro_rate or divide them among all the stock- holders of the two companies who had trans. ferred their stock, the result would have been combination in direct restraint of interstate commerce, because it would have placed in the hands of a small coterle of men the power to £uppress competition between two competing interstate carriers whose lines are practically sarallel. It will not do to say that so long as each rallway compauy has its own board of direc- tors it operates independently and is not controlled by the owner of the majority of its stock. It is the common experience of mankind that the acts of corporations are dic- tated and that their policy is controiled by those who own the majority of their stock. Indeed. one of the favorite methods in thess days—and about the only method—of obtaining control of a corporation is to purchase the greater part of its stock. It was the method fursued by the Northern Pacific and Great Gompanles to obtain control of the control the money market es- | from the standpoint of | ctations of formations along the same | obtained | the Government had been sustained | | i ntention that the merger of the Northern Pacific and the | Great Northern Railways was lile- gal was a shock to powerful finan- synd s Wall street, which ted in case the highest judicial power | i | [ [ | 1 i | UNITE D STATES i Consolidation Plan I.S Declared to Be lilegal. Would Violate the Interstate Com- merce Act. | Roads Cannot Com-| bine to End Com- petition. % | MOVING MER DIRE SPIRIT IN THE R, AND GOVERNM NORTHERN T OFFICIAL ED SUIT WHICH HAS JUST SECURITIES COMPANY WHO INSTITUTED AND gton and Quincy Rallroad, and sen by stockhold dominate the | will necessari] determine im- | portant _corporate act 3 By what has been done the power has been acquired (and provision for maintaining | it) to suppress competition netween two State | carriers wh, own and operate competing and parallel lines of railroad. Competition, we | think, Would nat be more cffs ¢ restrafned | than it is under and by of isting argument, if the two rajlroad com: | were consolidatéd tinder @ aingle charter. It | is manifest, therefore, that the New | charter is about the only shield which the de- dants can interpose between themselves and | e law which led to the acquisition would seem {o have been that uals the promoters could not, asoning between themselves, place the he two competing and parallel roads Ir ands of a single person or a few persons, g him or them the power to operate the roads in harmony and stifie com- | tition, yet that the rsons might ed a fictitious pe could neither nor ac s they directed, and by placing the tock in the pame of such artificial be- accomplish the same purpose. The manifest unreasondbleness of such a proposition and the grave consequences sure to follow trom its approval compel us to assume that it is unsound, especially when we reflect that the 1 as’ administered by courts of equity, looks diways at the substance of thin at the objeet accomplished—iwhether it be law- ful or unlawful—rather than upon the particu- lar devices or means by which it has been accomplished. CONGRESS IS SUPREME. So far as the New Jersey charter is con- cerned the question, broadly stated. which the court *has to determine, s whether a charter granted by a State can be used to defeat the will of the national legislature as expressed in & law relating to interstate trade and com- merce, over which Congress has absolute con- trol. ' Presumptively, at least, no charter granted by a State 's intended by the State to have that effect or to be used for such a purpose, and in the present instance it is clear that the State of New Jersey did not intend to grant a charter under cover of Which an object denounced by Congress as unlawful— namely, a combination conferring the power to restrain interstate commerce—might be formed and maintained, because the enabling act un- der which the securities company was organ- 17ed expressly declares that three or more per- sons may avail themselves of the provisions of the act and ‘become & corporation for any lawtul purpose.’ This language is not merely perfunctory; it means, obviously, that whatever powers the incorporators saw fit to assume they must hold for the accomplishment of ‘lawful obe jects. The words in question operate, there- fore, as a limitation upon all the ' powers enumerated In the articles of association, which were filed by the promoters of the securitles company, so that, however extensive and comprehensive’ these powers may seem to be the State of New Jersey has sald: ‘‘You shall not exercise them so &s to set at de- fiance any statute lawfully enacted by the Congress of the United States. or any other statuta enacted by any other State wherein ¥ou see fit to exercise yourqpowers.” But aside from this view of the subject if the State of New Jersey had undertaken tc invest the incorporators of the securities com- pany with the power to do acts in the cor- porating name which would operate to restrain interstate commerce and for that reason couid not be done by them acting as an association of individuals, then we have no doubt that such a grant would have been vold under tho provisions of the anti-trust act or at least that the charter could not be permitted to stand in the way of enforcement of that act. The power of Congress over interstate com- merce is supreme, far-reaching and acknowl- edges no limitations other than such as are prescribed by the constitution itself. No legislation on the part of a State can curtail or interfere with its exercise; and in view of the repeated decisions no one can deny that It is a legitimate exercise of the L ] ] Kosmos Line. South America, Peru and Chile. The fa- vorite 6000-ton steamer ‘““Theben,” carrying passengers, sails April 17. Through to Ham- burg via Mexico, Central and South America. The Theben touches in at the chief ports Central and South America. First Giass o te & pur tion which :‘.Ohl:l ']!fll. ‘"nnd ‘lfl:fi lhu'l'fl $75. Rfi:‘ to P nts on applicatios street, Ean Francisco, G BE DECIDED FAVORABL power In question for Cong neither natural r el dl g artificial persons can cam- n any form whatever o interstate commerce bine or place restrdints trade- METHODS ARE IMMATERIAL. It is understood, however, that such a con bination of interests as was formed and h been bheretofore described was lawful and n prohibited by the anti-trust act because such straint upon interstate trade or commerce, any, as It imposes, is indirect, collateral nd remote, and hence the combination is not le of that character which the Congress of the United States can lawfully forbid. It is pertinent, therefore, to Inquire in what way the existing combination that has been formed does affect Interstate commerce. It affects it, we think, by giving to a single corporate entity, or, more accurately, to a few men acting in ‘concerf and In its name and under cover of ts charter, the power to control all the means of transportation that are owned by two competing and parallel rallroads en- %aged in Interstate commerce: In other words, the power to dictate every important act which the two companies may do:. to compel them to act In harmony, in establishing interstate rates for the carriage of freight and passengers and generally to prescribe the policy which they shall pursue. It matters not, we think, through how many bands the orders come by which these aims are accomplished, or through what channels; the power was mnot only acquired by the combina- tion, but it. is effectually exercised, and it oper- ates directly on interstate commerce, notwit starding the manner of its exercise. by control- ling the means of transportation, to wit: The cars, engines and rallroads by which persons and commodities are carried, as well as by fix- ing the price to be charged ‘for such carriages, Again it ls urged, tentatively, that if the e: isting combination which the Government seeks to have dissolved is held to be one in violation of the anti-trust act and unlawful, then the act unduly restricts the rights of the'individual to make contracts or to buy and sell property, and is invalid for that reason. With reference to this contention, it might be suggested (as it has been by the Government) that as the situs of the stock which the securities company has bought 18 in the States of Wisconsin and Minne- sota, which, respectively. chartered the North- ern Pacific and the Great Northern companies, and the stock owes its being to the laws of those States and as each State has forbidden the consolidation of competing and parallel lines of railroad therein and has lfkewise pro- hibited any consolidation of the ‘‘stock and franchises’” of such roads—the contention last mentioned is entitled to little consideration in the case at bar. Eut, waving and ignoring this suggestion, the argument advanced in behalf of the defendants Is met and answered, so far as this court is by the decision in Addyston Pipe Steel Company vs. the United States, 15 U. 8. 2267220 “where it is said, inter alia: *Un- der this grant of power to Congress (the power to regulate commerce between the several States and with foreign nations) that body, in our judgment, may enact such legislation and declare void and prohibit the performanece of any contract between individuals or corpora- tions where the natural and direct effect of such a contract will be, when carried out, to directly and not as a mere incident to other anc innocent purposes, -regulate to any subs stantial extent interstate commerce." UNTENABLE CONTENTIONS. . Learned counsel for the defendants further contend as follows: That the antl-trust law was not intended to include or prohibit com- binations looking to the virtual consolidation of parallel and competing lines of railroad, al- though such a combination operates to.stifla competition; that no rellef can be granted to the Government in this instance because the' combination or conspiracy of which it complains has accomplished its purpose, to wit: The or- ganization of the securities company and the lodgment of the majority of the stock of the two railroads in its hand before the bill was filed; and, finaily, that the, combination proved was one “farmed in ald of commerce and not to restrain It”; in other words, that it was o formed to enlarge the volume of interstate tra fic and thus benefit the public. The court cannot assent to elther of thess propositions. The first, we think, is clearly uUntenable for the reasons already’ stated and tully disclosed in the decisions heretofors cited Concerning the second contention, we observe that it would be a novel, not to say absurd, interpretation of the anmil-trust act to hold that after an unlawful combination is formed and has acquired the power which It had no right to acquire—namely, to restrain commerce by suppressing competition—and is proceeding to use it and execute the purposs for ‘which the combination was formed, it must bs left in possession of the power that it has ac- quired with full freedom to exercise it. Ob- 11 | gasged | CIRCUIT COURT OF APPEAL NORTHERN PACIFIC-GREAT NORTHERN RAILROAD MERGER SCHEME IS DEALT ITS DEATH BLOW IN A SWEEPING DECISION RENDERED BY THE S — terpretation EW YORK, April 9.—One. of the counsel in the Northern Securities case sald to-night: yet this Is but from I have given it, I call attention to the closing phrase of Judges' order, which practically nullifles whole effect of the decision. It provides the Northern Securities Company may trai and assign the stock of the Northern Pacific and Great Northern roads now held by It to such person or persons as are now fhe hold- ers and ‘owners of Its stock originally lesued in exchange for stock of sald compan! This | right of transi is vital, and It seems to me renders nugatory the maln conclusion of the court. J. Plerpont Morgan sald: The question of the’ rh‘?t of two or more railroads to be operated by a holding _com- pany will be taken up to the United States Supreme Court. Instead of looking upon the decision of the court to-day as blow to rail road enterprise, I should say that the reverse is the tase Capital all over the country is anxlous to know: its rights u-the matter of railroad con- struction and operation. Railroad men want to_know where they stand. The decision to-day is just one step closer to a decision from the United States Supreme Cour curities company had won to-day the Govern- ment would probably have appealed. When railroad men know exactly how the law is to be interpreted they will probably find Rood ways to see that properties are operated economically and profitably. As an undigested opinion, the hasty glance your the wiously the sct, when fairly interpreted. wili bear no such construction. Congress almad to n interstate trade or commeree, When by an mbination or conspiracy, formed by eit natural or artificlal persons, such a power & Dbeen acquired: and the Government may ervene and demand rellef as well after the .combination is fully organized as while it Is in process of formation. In this instance, as we have already said, the securities company made itaeif .a garty to a combination in restraint of interstate com- merce that antedated its organizatign as soon as it came Into existence, doing so, of course, under the direction of the very individuals who prompoted it Rblative to the third contention, which has been pressed with great zeal and ability. this may be safd: It may be that suci'a virtusl combination of parallel and competinz . lines of railroad as has been effected, -takitg & broad view of the situation, is beneflcial rather than harmful. It may be that the motiyes | which inspired the company by which this | end was accomplished were wholly latiable | and upselfish; that the combination was formed | by the indiy defendants to protect great [ interests which had been committed to their charge; or that the combination was the Initial {and a nee ry step in the accompilshment * great designs, which, If carried out, & were conceived, 14 prove to be of In- estimable value to ties which these roads serve an at large. POINTS NOT IN ISSUE. We shall neither affirm nor deny either | of these propositions, because they present which we a called upon to de- and some of them Ive questton which are not within the province of any cour to_decide, involving as they do questions o yublic poilcy which Congress must determine our duty to ascertain whether the proof s & combination in direct r t int of erstate commerce; that is fo sa com- hination whereby the Dower has been acquired to suppress competition between two or more lines of raiiroad en- If it does competing and parallel in interstate commerce. which shall be final, for even if tne se- | | destroy the power to place any direct restrainy | 'MORGAN SAYS OTHER METHODS OF COMBINING WILL BE FOUND Raiload Men Will Profit by the Court’s.In- of the Law. eading financiers was A conference of I ry ce of J held this afterncon in the wmr‘ ‘.'? £ A Morgan & Co. to discuss the detalls @ U | deciston and its bearing upon railr future. | properties in ] VETOES CONSOLIDATION BILL. Governor of Texas Objects to:Union of Competing Roads. AUSTIN, Texas, April 9—Governor Latham to-day vetoed ~the SoutHern Fa- | eific Rafiroad comsolidation bl whkich had been passed by the Legislature. TF: | bill authorized the purchase and operatio by the Galveston, Harrisburg and San Antonio Raflway Company of the w York, Texas and Mexican, the Guif, W»slg Texas and Pacific, the Gonzales brarch and the Galveston, Houston and Northern Railroad. In his proclamation vetolrg | the bill Governor Latham sayst inst the combination ng lines of rallroads is and s has been the Settiédypolicy o as well as of maz ::i(h.tfl:” Union. This po -not only e A A TR necessary 1o Pyotect the ment of - mpnopolies. | | para for many ¥ | this Stat States of th found place clared by the courts x ublic n the estal e emntmmity with which thesRarious States have legislated against thes gembination of such action is not the resuit of logak prejud: | But of the general belief that: such monopol are reprehensible and that-competition should remain untrammeled ”..:””“,“..”,:““. discloss such a combination (and we have it te hesitation In answering” tMy question the affirmative) then the anti-trust act. as | 1t has been heretofors interpreted by the court | of last resort. has been violated and the Gov | ernment is entitled to a decree. A formal decree in accordance with the decision was filed. Gircult Judges Caldwell, Sanborn. Thay | er ana Vandeventer heard the case and all concurred in the opinion. which was written by Judge Thayer and file Louis the same ‘time it was down In the United States Clrc | of Appeais in this city ‘The defendants are the Northern Secur ities Company, the Northern Pacific Ra way Company, the Great Northern Ral road Company, J. J. Hill, William Clo D. 'W. James, John 8, Kennedy, J. P Morgan, Robert Bacon, George F. Baker anrd Danlel 8. Lamont. | —— MAJOR HARDIN NAMED TO INSPECT THE GUARDS General - MacArthur Selects Seventh Infantry Officer for Work With } State Troops. SACRAMENTO, April $.—It is an- nounced that Major General Arthur Mac- | Arthur, commanding the Department of Californfa, U. S. A., in San Francisco | has detalled Major E. E. Hardin of the | Seventh Infantry, U. S. A., to inspect ths | National Guard of California under the | Dick bill recently epacted by Congress. The inspection of the National Guard will be held between ApriF20 and July 1 of this year. : for Boysa brim sailor straw with patent leat! Out-of-Town Orders Filled for Anything in Boys® outfittings — SNWTD (0 718 Market Street Confirmation Suits nd Youths 20 Of all times -that. a; hoy should be well dressed s gh'l he is being cmfi'.;hi. No doubt every mother thinks sd, too, but she may not know that we offer her a swell line of suits for boys of every age that are not only fashionably cut and tailored, but are popu- larly priced. y The goods are made by us and sold direct to you. This is your saving of at least a3 per cent. The crowds that ;visit this department every day . is'pretty good evidence that our. goods and prices are right. Our assortment of con- firmation suits comprises bine and black cheviots, serges and clay worsteds, as follows: p Two-piece suits TOm 7 to 15 years; _prices $3.-50, .00, $4.50, $5-00 and upwards. for boys Three-piece suits, single or goublfe breasted styles, for oys from ¢ to 16 years: prices $5.00, '$6.00, $6.50, $7-50 and upwards. Youths" suits, single or double breasted styles, for yo_uths from 12 to 19 years; prices $7.50, $8.50, $9.00, $10.00, $12.50 and up wards. “Mother’s Friend” shire waists, made of Garner's best percale, with or without collars attached, regular $1.00 waists; special at €3e. Boys’ khaki suits, made of the same material as used by U. S. Government soldiers: norfolk coat and long pants. sizes 3 to 14 years; sal , $1.35. sale price, Boys’ and children’s stra. bats, vacht and sailors, with small or large brims, 45¢ 75e, $1.00, up to $2.50. We have the exclusive right from the manufacturers to sell the wide her top, price Write us.