The consolidation of what was once hundreds of railroads into just seven class 1 railroads today (plus Amtrak) was always controversial. In 1901, to protect his railroads from raiders such as Edward Harriman, James J. Hill created the Northern Securities Company to hold the stock of Great Northern and Northern Pacific. Though this did not operationally merge the two railroads, the Supreme Court held that it violated anti-trust legislation.
Click image to download a 2.7-MB PDF of this 22-page booklet.
By 1920, attitudes towards mergers had changed. As this booklet (which I photographed at the Minnesota History Center) notes, the law at the time of court’s Northern Securities decision was based on the “theory that unbridled competition was of paramount importance in giving the public good, ample, and cheap railroad service.” By the 1920s, that theory was considered “mistaken,” and instead competition was considered “ruinous” because it led to too much duplication of effort. Continue reading