The ruling of Northern Securities Co. v. the United States was an important judicial decision regarding antitrust law. Justice John Marshall Harlan wrote the decision for this case.
In Northern Securities v. the United States, the Supreme Court held that the Northern Securities Company was operating as a monopoly and ruled to dissolve it. This decision strengthened the power of the Sherman Anti-Trust Act and broadened the interpretation of the Constitution’s Commerce Clause.
The purpose of the Sherman Act is to limit the use of monopolies, which hinder competition between companies.
Prior to this ruling, which occurred under the presidency of Theodore Roosevelt, many politicians were hesitant to enforce this law. The Northern Securities Co. v. the United States decision was the first significant application of this Act.
The Northern Securities Company was a trust formed in 1902 by E. H. Harriman, James Hill, J. P. Morgan, and John D. Rockefeller, that owned and operated several of the major railways in the United States. Before this the company was created, Hill, who was in control of the Great Northern Railway, and Harriman, who owned the Northern Pacific Railway, battled to gain control of the Burlington line that would allow each of their rails accesses to Chicago, Illinois.
Hill and Harriman waged a war to buy out the most shares of the Burlington Railroad’s stock and, as a result, ended up significantly increasing the purchase price of railroad stock. As a means to resolve the conflict, the men formed the Northern Securities Company as a monopoly that controlled the Great Northern Railway, the Northern Pacific Railway, the Burlington Railroad, and several others. Once the public became aware of the
monopoly, a plan by President Roosevelt followed quickly to file suit against the Northern Securities Company.
The Court held that the existence of the Northern Securities The company eliminated the competition between the companies that formed it and, consequently, eliminating the ability of other similar companies to compete with the monopoly. The Court found that the formation of this company was in fact intended to eliminate competition and it was, therefore, ordered to dissolve. The Court was operating based on the Commerce Clause of the United States Constitution.
The Commerce Clause states that Congress has the power “to regulate Commerce with foreign Nations, and among the several States…”. This is what gives the Supreme Court power to dissolve any company that they determine to be a monopoly. The Supreme Court Justices found that the actions of the company were unreasonable enough that it constituted a monopoly. Congress applied a broad interpretation of the Commerce A clause in the Northern Securities Co. v. the United States decision.
Theodore Roosevelt was the first politician to strictly enforce the Sherman Anti-Trust
Act and gave others the ability to do so. After this decision, several other cases appeared before the Supreme Court that was similar in circumstances. The Northern Securities case formed a precedent, and these cases were given similar rulings.