The Railroad Builders: A Chronicle of the Welding of the StatesMoody, John
History
The Railroad Builders: A Chronicle of the Welding of the States
Moody, John
Railroads -- United States -- History
The outcome was the formation of the Northern Securities Company with a
capital of $400,000,000, nearly all of which was issued to acquire the
capital stocks of the Northern Pacific and Great Northern railroads.
All the properties, including the Burlington, thus came under the joint
control of the Harriman and Hill groups. The division of territory on
both the east and the west was worked out amicably: the Northern Pacific
abandoned some of its plans for extensions in Oregon, and the Burlington
system remained as it was, with the understanding that no extensions
should be built to the Pacific coast. Later the Burlington acquired
control of a cross-country system, the Colorado Southern, extending
south to the Gulf, but to this day has made no attempt to build beyond
the lines it owned to Wyoming in 1901.
As is well known, the Northern Securities Company was subsequently
declared to exist in violation of the Sherman Anti-Trust Act, and on a
decision of the United States Supreme Court in 1904 it was practically
dissolved and all its securities were returned to the original holders.
This dissolution left the Hill-Morgan interests in undisputed control of
the Burlington properties, but harmonious relations had in the meantime
been established among the contestants, assuring an equitable division
of territory and traffic. The final outcome was that the Union Pacific
Railroad Company, which had purchased with its large surplus and by the
use of its high credit many million dollars' worth of the capital stocks
of the Great Northern and Northern Pacific railroads, received these
stocks back after several years of great prosperity and after
the appreciation in the market values of the stocks had exceeded
$60,000,000. There was no further necessity for holding them and most
of the stocks were sold at the high prices of 1905 and 1906, with actual
net profit for the Union Pacific Railroad in excess of $50,000,000. No
such gigantic financial transaction as this had ever before been carried
through by an American railroad corporation.
Public-domain text, read in full here on John Shaqi.
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