In general, by the first decade of the twentieth century American railroads were consolidating into great interregional systems. In these groups of railroads, individual companies remained distinct, but cooperated with other railroads through joint ownership and overlapping memberships on boards of directors.
Two giants of American railroading and finance were involved in this process of railroad consolidation.
- One, J.P. Morgan, was by this time Wall Street's most powerful investment banker. Among Morgan's many interests were holdings in the Northern Pacific Railroad, whose tracks ran from Lake Superior in Minnesota west to the Pacific Coast in Oregon and Washington.
- The second, James J. Hill, was the St. Paul based "empire builder" whose Great Northern Railroad crossed the same states as the Northern Pacific lines.
Hill was one of the nation's greatest railroad magnates, Morgan its greatest Wall Street financier. Both Hill and Morgan saw an advantage in controlling the Burlington Railroad, which connected the Twin Cities of Minnesota with Chicago, and whose lines extended deep into the grain belt of the upper Midwest.
Hill and Morgan arranged a new corporation, which they jointly controlled, the Northern Securities Company, to own the stock of both the Northern Pacific and the Burlington railroads. This arrangement would end competition between those two great "transcontinental" carriers and provide shippers with improved long-haul service.
For Roosevelt, this proved a great victory. Not only did the victory earn him the politically popular title of "trust buster," the victory asserted the power of the presidency and demonstrated that the executive branch was even more powerful than the nation's most powerful business institutions. In the seven years he served as President, Roosevelt brought suit against 43 other trusts.
The Northern Securities case led to two other important results.
- After the Supreme Court announced its decision, a "gentlemen's agreement" practice emerged between "the house of Morgan" and the Roosevelt administration.
- Roosevelt began to support federal incorporation.
In good partisan fashion, the Democrats of course criticized Roosevelt for his antitrust policies. Democratic leaders, including Wilson in the 1912 campaign, argued that their part stood for real enforcement of the antitrust statutes.