Antitrust Status of Farmer Cooperatives: - USDA Rural Development ...

As noted earlier, the turn of the century witnessed a major merger
movement in the United States, highlighted by the decision of the
petroleum industry to reorganize as a holding company. In the space
of a half-dozen year s, mor e than 2,800 business firms entered mergers,
including more than 1,200 in 1899.
The turn of the century also marked a change in Government
attitude, personified by the ascension in 1901 of Theodore Roosevelt
to the presidency. 85 Roosevelt was not a dogmatic "trust-buster." But
he felt big business needed to recognize a social responsibility.
When some large corpor ations didn' t respond to his urging to be
less ruthless and self-centered, Roosevelt decided he needed to do
something to get their attention. He instructed the attorney general to
institute antitrust proceedings against the Northern Securities
Company, a holding company organized in New Jersey by
stockholders of the Great Northern Railway Co. and the Northern
Pacific Railway Co. These two companies operated competing and
substantially parallel lines from the Great Lakes to Puget Sound. The
venture was backed by the most powerful capitalists of the era--J.P.
Morgan, John D. Rockefeller, Edward H. Herriman, and James J.
Hill.
The business community was stunned by Roosevelt's bold move.
Big business was even more alarmed when the Supreme Court found
this holding company eliminated competition between the lines and was
therefore an illegal restraint of trade. 86 The decision was close, 5-4,
and four separate opinions covering more than 200 pages in the United
State Reports were issued. But it accomplished Roosevelt' s purpose
of establishing precedent that the mere creation of a holding company
didn' t shield anticompetitive conduct from antitrust enforcement.
Business received another setback the following year when the
Court held that a relatively informal, but successful, coalition of meat
packers that controlled prices they paid for live cattle and charged for
85 In 1900, Roosevelt was elected vice president on the Republican ticket
headed by William McKinley. Six months into his term, M cKinley was
assassinated at Buffalo, NY. On September 14, 1901, Roosevelt became
President. In 1904, he was elected to a second term in a landslide.
86 Northern Securities Co. v. United States, 193 U. S. 197 (1904).
35