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Northern Securities: 1901–1904

The Northern Pacific Railway went bankrupt in the Panic of 1893. The bankruptcy wiped out the railroad's bondholders, leaving it free of debt, and a complex financial battle for its control ensued. In 1901, a compromise was reached between Morgan, New York financier E. H. Harriman and Minnesota railroad builder James J. Hill. To reduce competition in the Midwest, they created the Northern Securities Company to merge three of the region's most important railways: the Northern Pacific Railway, the Great Northern Railway, and the Chicago, Burlington and Quincy Railroad. The parties ran into unexpected opposition from President Theodore Roosevelt, who considered the merger bad for consumers and a violation of the seldom enforced Sherman Antitrust Act of 1890. In 1902, Roosevelt ordered Attorney General Philander Knox to sue to break it up. In 1904, the Supreme Court dissolved the Northern Security company; though Morgan did not lose money, his all-powerful political reputation suffered.