The U.S. government successfully brought suit against the trust formed by the Northern Securities Company for violations of the Sherman Antitrust Act. This victory demonstrated the government’s power to break up industrial monopolies.
The late nineteenth century saw the rapid industrial development of the United States, including the growth of corporations and trusts. Although
In 1901, James Jerome
This lithograph from the 1930’s depicts the empire builders, some of whom were involved in the Northern Securities Company: (from left) James Jerome Hill, Andrew Carnegie, Cornelius Vanderbilt, John D. Rockefeller, J. P. Morgan, Jay Cooke or Edward H. Harriman, and Jay Gould.
The creation of the Northern Securities Company was significant but not unique among business dealings at the time. What made it different was the response of President Theodore Roosevelt. On February 19, 1902, under Roosevelt’s direction, Attorney General Philander Knox filed suit against the Northern Securities Company for violations of the Sherman Antitrust Act. Roosevelt’s motives were several. As a New York patrician and as a progressive, Roosevelt was distrustful of the growing power of industrial capitalism. Politically, with his eye on his reelection in 1904, an attack on one of the more notorious trusts (it is estimated that 30 percent of the stock of the Northern Securities Company was “watered” or inflated) would be popular with U.S. producers and consumers. Also, Roosevelt had little faith that the conservative Republican majority in Congress would establish meaningful laws to regulate corporate power.
The suit against the Northern Securities Company produced shock on Wall Street. In 1904, the Supreme Court ruled, in a five-to-four decision, that the Northern Securities Company had violated the Sherman Antitrust Act by its restraint of trade. The holding company was dissolved. It was the first meaningful demonstration of the government’s power to attack industrial monopolies. Roosevelt was reelected in 1904 and gained the nickname of “the Trust Buster.” Ironically, he actually favored federal regulation rather than the breaking up of business trusts.
Dalton, Kathleen. Theodore Roosevelt. New York: Knopf, 2002. Meyer, Balthasar Henry. A History of the Northern Securities Case. New York: Da Capo Press, 1972. Morris, Edmund. Theodore Rex. New York: Random House, 2001.
J. P. Morgan
Sherman Antitrust Act