Northern Securities Co. v. United States, 193 U.S. 197; 24 S. Ct. 436; 48 L. Ed. 679 (1904)
Facts—The Northern Pacific and Great Northern Railroad Companies purchased most of the stock of the Burlington Railroad. The first two companies ran parallel lines and the Burlington was a connecting line. The Northern Pacific and Great Northern entered into a combination to form a New Jersey corporation, called the Northern Securities Company. This company held three-fourths of the stock of the two companies. The United States charged them with violating antitrust laws.
Question—Does this railroad combination restrain trade among the several states and therefore violate the antitrust laws?
Reasons—J. Harlan (5–4). This combination was, within the meaning of the act, a “trust,” but, even if not, it was a combination in restraint of inter- state and international commerce and that was enough to bring it under the condemnation of the act. The mere existence of such a combination and the power acquired by the holding company as its trustee constituted a menace to, and a restraint upon, that freedom of commerce which Congress intended to recognize and protect, and which the public was entitled to have protected. Even if the state allowed consolidation, it would not follow that the stock- holders of two or more state railroad corporations, having competing lines and engaged in interstate commerce, could lawfully combine and form a distinct corporation to hold the stock of the constituent corporations, and by destroying competition between them in violation of the act, restrain com- merce among the states and with foreign nations.
J. White and J. Holmes authored dissents. White questioned whether Congress had authority to regulate stock ownership. In his dissent, Holmes uttered his famous statement that “Great cases like hard cases make bad law” and questioned not only congressional powers but the Court’s interpretation of the congressional statute.
Note—In reacting to Holmes’s dissent, President Theodore Roosevelt, who appointed Holmes as a liberal only to see him vote as a conservative, stormed, “I could carve out of a banana a judge with more backbone than that.”