were in no wise obnoxious to any law of the United States—an opinion which has received the approval of four justices of the supreme court of the United States, namely, Mr. Chief Justice Fuller, and Associate Justices Edward D. White, Rufus W. Peckham and Iliver Wendell Holmes, in the suit brought by the United States against the right of the company to hold and vote the shares. However, the majority of the court, disregarding as irrelevant any beneficial increase of commerce, was of the opinion, that as a matter of law your company's holding of the stocks of the two railway companies in itself constituted a restraint of interstate commerce prohibited by the so-called Sherman Act of 1890. Accordingly the railway companies have been forbidden to permit your company to vote or to collect dividends on the shares held by it. Therefore, your directors, at a meeting held this day, have, under advice of counsel, decided that in order to fully and promptly comply with the decree in this suit, it is necessary to reduce the capital stock of the company, and to distribute to its shareholders the shares of stock of said railway companies now held by it. To this end they have adopted resolutions recommending to the stockholders First. That the capital stock of this company be reduced from 3,954,000 shares, now outstanding, to 39,540 shares, being a reduction of 99 per centum. Second. That said 99 per cent. of the present outstanding shares be called in for surrender and cancellation. Third. That against each share of the stock of this company so to be surrendered, there will be delivered $39.27 stock of the Northern Pacific Railway Company, $30.17 stock of the Great Northern Railway Company, and proportionate amounts thereof for each fraction of a share of stock of this company so to be surrendered. As required by the laws of the State of New Jersey, under which the company was created, a special meeting of the shareholders of this company has been called by the board of directors, for Thursday, April 21, 1904, at eleven o'clock in the forenoon, at the office of the company, 51 Newark Street, Hoboken, N. J., to vote upon said resolutions and upon such other business as may be brought before said meeting. For the purpose of this meeting, the stock transfer books will be closed April 18, 1904, at three o'clock P. M. Holders of this company's stock to a large extent have already expressed their approval of the recommendations of the board, but the laws of New Jersey require a two-thirds vote of the shareholders to permit the company to reduce its capital stock. Such vote is the first step necessary for the proposed distribution of the railway companies' shares. The collection of the May and subsequent dividends on such shares being forbidden by the decree until such distribution has been made, the importance of promptly executing and forwarding proxies is obvious. The assets of the company remaining in its treasury after the foregoing distribution is made, will consist of stocks and other property in no way involved in the suit, producing income, and conservatively valued at an amount in excess of the $3,954,000, to which it is proposed to reduce the stock of your company. Notice of the due approval by the special meeting of the recommendations of the board of directors will be immediately published, whereupon, stockholders should deliver their entire holdings of stock at this office promptly on and after April 23, 1904. Against such delivery, certificates for the one per centum thereof to be retained by stockholders, will be returned to them, together with the amount of stock of each of said railway companies, to which they may become entitled as above, on account of the ninety-nine per centum of their holdings of Northern Securities stock surrendered for cancellation. Fractional parts of shares will be adjusted by the delivery of scrip certificates. All stock surrendered must be fully executed for transfer, either upon the certificates or upon an attached power of transfer. By order of the board of directors, JAMES J. HILL, President. EDWARD T. NICHOLS, Secretary. APPENDIX 8. LETTER TO STOCKHOLDERS. NORTHERN SECURITIES COMPANY, To the Stockholders: New York, June 11, 1904. A circular recommending reduction of the capital stock of this company and a ratable distribution of its railway shares as surplus assets was issued March 22, 1904. Shortly thereafter Messrs. Harriman and Pierce and the Oregon Short Line Railroad Company petitioned the circuit court for the District of Minnesota for leave to intervene in the suit of the United States against this company, asking that this company should deliver to them $78,108,000 stock of the Northern Pacific Railway Company (part of the common assets of this company), instead of their ratable proportion of such assets as proposed by your directors in that circular. The court denied the petition. About the same time, another suit on similar grounds was brought against this company in the Court of Chancery of the State of New Jersey by the Continental Securities Company, Clarence H. Venner, president. In this suit an injunction was asked forbidding the holding of your special meeting called for 'April 21, 1904. The court refused to grant the injunction, holding that this company had title to the stocks of the Northern Pacific and Great Northern Railway Companies, that their proposed distribution was in conformity with the laws of New Jersey (the State in which this company is incorporated), and in no way violative of the decrees of the United States court. On the 20th of April, 1904, Messrs, Harriman and Pierce and the Oregon Short Line Railroad Company began another suit against this company in the circuit court of the United States for the District of New Jersey, on grounds, and making claims, similar to those in their application in the State of Minnesota. In this case there has been a hearing on plaintiff's motion for a preliminary injunction to restrain this company from parting with the particular stock claimed by them. An early decision on this motion is expected. The special meeting of stockholders was held April 21, 1904. Those present, representing nearly 75 per cent of the capital stock of the company, unanimously adopted resolutions reducing its stock to $3,954,000, and providing for the ratable distribution of its railway shares as surplus assets recommended by your directors in the circular of March 22, 1904. The Northern Pacific and Great Northern Railway Companies declared, at the usual dates, quarterly dividends of 134 per cent on their respective shares, payable May 2, 1904, to those persons in whom the title to such shares shall be found to vest. Cash to pay these dividends has been set apart and deposited in bank for that purpose by both railway companies and payment thereof will immediately follow the distribution and formal transfer of the railway shares. Your company is advised that the earnings and income of the railway companies in which it is interested as a stockholder continue satisfactory. Respectfully, President. APPENDIX 9. BALANCE SHEET. NORTHERN SECURITIES COMPANY, 26 Liberty Street, New York. To the Stockholders of the Northern Securities Company: The reduction of the company's capital stock from $395,400,000 to $3,954,000, made by the amendment to its Certificate of Incorporation adopted by the stockholders at their special meeting held on April 21, 1904, having in all respects been sustained by the unanimous decision of the supreme court of the United States, became finally effective from and after April 18, 1905, by the filing, on that date, in the proper office of the State of New Jersey, of the Certificate of Amendment. The pro rata distribution of the company's holdings of Northern Pacific and Great Northern shares, in process of carrying out the reduction of its own capital stock, has substantially been completed. Considerably less than one-hundredth part of one per cent of the company's original stock, held in small, scattered lots, remains to be surrendered. From the company's remaining assets, represented by its reduced capital stock, it has received, during the current business year, ending December 31, 1905, income sufficient to permit payment to holders of that stock of a dividend of five per centum upon the amount thereof. Your board of directors has accordingly declared a dividend at that rate, payable on January 10, 1906, to holders of record on that date of shares of the reduced capital stock. For your information herewith are transmitted a revenue account, a general statement of transactions and a balance sheet, prepared by the company's secretary and treasurer, affording, in concise form, a complete view of the company's business operations from the commencement to the present date. By order of the Board of Directors, December 31, 1905. President. |