The outstanding dramatic event in the story of the modern Northern Pacific was the famous corner which occurred in the spring of 1901 as a result of a contest between the Hill and the Harriman interests for the control of the property. The details of this operation, which sent the price of Northern Pacific stock up to $1000 a share and precipitated a stock-market panic, form part of the story of the Harriman lines. The contest resulted in the formation of the Northern Securities Company, a corporation of $400,000,000 capital, devised as a holding company under the joint control of the Hill and Harriman interests, for the purpose of retaining a majority of the stocks of the Northern Pacific and the Great Northern.
The Hill interests, jointly with the Morgan control of the Northern Pacific, had been quietly accumulating stock in the Chicago, Burlington and Quincy Railroad, and Harriman felt that there was grave danger to the Union Pacific in this move, as the Burlington had already penetrated into the Union Pacific territory and might at any time start to build through to the coast its own line parallel to the Union Pacific. Harriman consequently began to buy up Northern Pacific stock in the open market and thus, together with the efforts of the Hill and Morgan people to retain and strengthen their control, brought about the corner.
The Northern Securities Company was designed to harmonize all interests and to keep the control of the Burlington property jointly in the hands of Harriman and Hill. But as the result of a suit under the Sherman Antitrust Act, this combination was declared illegal, and in 1904 the company was dissolved. The final outcome of the situation was that the Northern Pacific, sharing with the Great Northern the joint control of the Burlington lines, was left indisputably in the hands of the Hill-Morgan group, where it has ever since remained. These three great railroad systems, the Northern Pacific, the Great Northern, and the Chicago, Burlington, and Quincy constituting nearly twenty thousand miles of railroad, have been known ever since as Hill lines.
Since the dramatic days of the Harriman-Hill contest, the history of the Northern Pacific system has been simply a striking reflection of the growth in population and wealth of the great Northwest. The States through which it operates have grown with astounding rapidity during the past two decades; small cities have spread into great centers of manufacture and trade; hundreds of smaller towns have sprung up; natural resources of untold value have been developed. In the meanwhile, the Northern Pacific has forged ahead in its earnings and profits, and the stock of the road has come to be known as one of the highest class of investment issues. Although new competition appeared, in both the local and the through business of the company–notably by the extension of the St. Paul system largely through Northern Pacific territory to the Puget Sound region–the superior modern business management of James J. Hill, backed by the strong resources of the Morgan banking interests, made the Northern Pacific one of the standard railroad systems of America.
About the Author: John Moody was the author of The Railroad Builders, A Chronicle of the Welding of the States, written in 1919. Penetrating the Pacific Northwest is the seventh chapter of the book.