1904 Northern Securities Case for kids: Theodore Roosevelt
The Progressive Era saw the introduction of a vast range of Federal Reforms in relation to Conservation, health and safety measures, consumer protection and economic regulations. Theodore Roosevelt was the most influential of all the leaders of the progressive movement and whilst his presidency focused on efficiency and fairness he wanted to reduce the power held by Big Business and Corporations who had set up new businesses called Trusts.
1904 Northern Securities Case for kids: The Trusts
Big Businesses and corporations formed 'Trusts' which enabled them to merge businesses without violating the laws against owning other companies. The establishment of the Trusts was a way to monopolize an industry and continue the practice of regulating the supply and price of commodities.
1904 Northern Securities Case for kids: Laws to curb Monopolies and the Holding Companies
New laws were passed in response to public demand that the monopolies should be be regulated. The 1890 Sherman Antitrust Act was passed by Congress to protect commerce and trade from unfair business practices that controlled prices or limited competition. A new law was passed allowing companies to create a new organization called 'Holding Companies'. A Holding Company owned the stock of companies but did not produce anything themselves, this allowed for all of its small companies to be merged into one massive organization.
Northern Securities History for kids: J.P. Morgan, James J. Hill and E.H. Harriman
The ruthless Robber Barons of American industries fought to increase their empires, profits and power. A serious fight between some of the Robber Barons erupted on the Stock Exchange over who would gain control over the Burlington Railroad. The railroad magnate E.H. Harriman who owned the Union Pacific Railroad wanted the Burlington Railroad. But James J. Hill, the owner of the Northern Pacific Railroads, joined forces with banker J.P. Morgan who together, also wanted to buy the railroad. The stock battle nearly triggered a financial panic. Eventually the three men joined together, bought the Burlington Railroad and created a massive new holding company called Northern Securities.
Northern Securities Holding Company: Theodore Roosevelt
The formation of the Northern Securities Holding Company resulted in an outcry by the American Public. These enormously wealthy magnates appeared to do whatever they wanted - finding loopholes such as the formation of Holding Companies. The were so powerful they believed they were untouchable. President Roosevelt made the decision to take them to task. He and his advisors believed that the Northern Securities Holding Company had formed a monopoly and was in violation of the 1890 Sherman Antitrust Act.
Northern Securities: J.P. Morgan meets with Roosevelt
In early 1902, President Roosevelt ordered the Department of Justice and his attorney general to file a lawsuit against Northern Securities. J.P. Morgan was astounded and went to meeting at the White House with the President. J.P. Morgan treated the President like 'one of the boys' saying:
"If we have done anything wrong send your man to my man and they can fix it up."
President Roosevelt proceeded with the Northern Securities case. He 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."