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The Saint Paul globe. (St. Paul, Minn.) 1896-1905, September 05, 1897, Image 22

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Persistent link: https://chroniclingamerica.loc.gov/lccn/sn90059523/1897-09-05/ed-1/seq-22/

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< - ,-vm/f * ivrT"!/-* UICTAHV How the Great Transcon-
J SB OM ANTIC nISIOKY tinental Line Was Built
\ W OF THE NORTHERN • *"* Its Eventful Finan-
S i l^k. nir-irsr 1 r» al l nAAH cial Career— Cause of Two
j * PACIFIC RAILROAD. Bankruptcies.
The appointment of a new president
for the Northern Pacific Railway com
pany and the successful completion
of the reorganization project furnishes
a fitting occasion for a rehearsal of
the checkered history of this great cor
poration, says E. V. Smalley in the
Chicago Times- Herald. The story has
many interesting features and dens'es
added interest from the fact that the
original underlying motive which gov
erned the creation of this company for
the building of a northern line to the
Pacific coast was a patriotic impulse
toward national development and for
bringing into close and permanent re
lations the then far distant communi
ties on the Pacific coast with the great
body of the country lying in the Mis
sissippi valley and on the Atlantic
coast. The first newspaper writer on
this theme was Dr. Samuel Bancroft
Barlow, a practising physician, living
in Granville, Mass., and father of S.
L. M. Barlow, an eminent New York
lawyer, who died recently. As early
as 1834 Dr. Barlow began to write arti
cles for the papers in favor of the gen
eral government undertaking the con
struction of a railroad from New York
city to the mouth of the Columbia
river. These articles appeared in the
local newspapers in Western Massa
chusetts, and one of them, published
In the Westfield Intelligencer about
1834, was preserved by his son. About
the same time Samuel Parker, a mis
sionary to the Indians, living in the
heart of the Rocky mountains, added
his testimony in print to the claim that
the mountain range would be no bar
rier to railroad construction between
the eastern and western slopes of the
continent. To both of these writers
the valley route by the Missouri and
Columbia rivers seemed to be the one
evidently marked out by nature.
It is probable that Asa Whitney, who
is usually regarded as the father of ths
idea of a railway to the Pacific coast,
and who began ten years later an agi
tation in congress for legislation for
the construction of the proposed line,
had never heard of the writings of Dr.
Barlow and Rev. Samuel Parker, be
cause he had long been In China as
a merchant and did not return to the
United States until 1844. In 1845, in
company with a party of young men
from different states, Mr. Whitney
ascended the Missouri river 1,500 miles.
Returning he appeared in Washington
in December of that year with a mag
nificent scheme for a railroad from
Lake Michigan to the Pacific coast, to
be built by him with the proceeds of
a grant of land for thirty miles on
each side of the track. Whitney got
little for his pains at first but ridicule,
but he was a courageous man, who
thoroughly believed in his project and
was not to be put down by sneers and
In IS4B Mr. Whitney made another
effort in Washington, and obtained se
lect committees in both houses for the
consideration of his bill. This bill did
iiot provide for any corporate com
pany. It authorized Asa Whitney, his
heirs or assigns "to construct a rail
road from any point on Lake Michi
gan to the Mississippi river he may
designate, in a line as nearly straight
as the face of the country will permit,
and where the streams may be bridged,
to some point on the Pacific coast,
where a suitable harbor may be
found." It set apart all the government
lands within thirty miles of the line
for the raising of money by their sale
for the construction of the railroad.
Whitney was to pay the nominal price
of 10 cents per acre for the ground as
fast as sales were made, and was to
receive a five-mile strip of land, sixty
miles wide, from the grant for every
section of ten miles of road he com
pleted. Whitney was to be the sole
owner of the road. The government
was to establish rates on the road and
regulate its operation and pay him a
salary of $4,000 for Its management.
The senate committee actually report
ed this bill favorably, but Thomas H.
Benton attacked it with such vigor
that it was tabled by the close vote
of 27 to 21. Whitney made a final ef
fort in 1549 and published In that year
a book entitled "Project of a Railroad
to the Pacific." He estimated the
length of his road at 2,020 miles, and
the cost of its construction at $40,600,
--000, which was scarcely one-half the
amount the Northern Pacific subse
quently cojrt.
The route indicated on the map which
he submitted to congress was shown
by a line drawn from St. Joseph, Mich.,
to Prairie dv Chien, Wis., then straight
across the country to Lewis and Clarke
pass in the Rocky mountains, then
down the Clear Water and Snake riv
ers to Walla Walla and the Columbia,
finally crossing the Cascade mountains
to Puget sound. This was, in the
main, the route subsequently followed
by the Northern Pacific engineers.
Whitney spent his efforts and his for
tune in educating public sentiment, and
passed his last years in keeping a
dairy and selling milk in Washington.
The next prominent advocate of a
railway to the Pacific was an eminent
engineer named Edwin F. Johnson,
who probably knew more than any
other man living in his time about the
part of the country between the great
lakes and the Mississippi on the east
and the Pacific shores on the west.
Nothing, however, could be done in
congress for the reason that the South
ern leaders had already begun their
efforts for the extension of slavery, and
they were determined no railway
should be built to the Pacific north of
the thirty-fifth parallel. A pamphlet
by Mr. Johnson in favor of the north
ern route spurred Jefferson Davis, then
secretary of war, to immediate action
and caused him to secure the passage
of a bill authorizing: government sur
veys of all the proposed routes. When
tho surveying parties were sent it was
allfg-ed, perhaps unjustly, that politi
cal motives influenced the selection of
the officers put In charge by Mr. Davis
and that n report in favor of two
southern routes was arranged for in
advance, and., further, that the officers
put In command of the northern sur
vey were expected to report against
that route because of their sympathy
with the Democratic party as then con
trolled by the South. The officers in
question -sverc Stevens and McClellan,
v.-ho both became famous during the
civil war.
Tho military parties sent out by the
war department made reports on five
distinct routes from the Mississippi
valley to the Pacific coast, the first one
on the thirty-first parallel, the second
on the thirty-fifth, the third on the
thirty-eighth, the fourth en the forty
first and forty-second and the fifth be
tween the forty-seventh and forty
niuth parallels. The report on these
surveys filled thirteen quarto volumes,
which were printed by order of con-
gress with a profusion of cuts and
numerous maps. As was expected,
Jefferson Davis, in summing up his re
port to congress from the information
obtained, strongly recommended the
most southerly route, dwelling especial
ly on its freedom from obstruction by
The gold discoveries in California
concentrated public interest in that
state. When opinion in congress had
progressed so far as to make legisla
tion for a transcontinental road re
garded with favor by that body the
northern line was abandoned in favor
of Benton's line from the Missouri riv
er to San Francisco by way of the
Great Salt Lake. An effort to com
bine In legislation the northern route
Avith the middle route, then strong in
favor, was unsuccessful.
In the midst of sectional jealousies
and the confusion of local projects
for railroads to the Pacific coast, which
prevailed in Washington previous to
1860, there appeared upon the ground
a man of definite purpose and strong
will, who knew exactly what he want
ed to do and had sufficient earnestness
and enthusiasm to convert other men
to his views. This man was Josiah
Perham, of Maine, born at Wilton,
Franklin county, and in early life a
country storekeeper and woolen manu
facturer. Failing a second time, he
former a partnership with a painter,
who had produced what was known
as the seven mile mirror, taken from
the great lakes, Niagara falls and the
St. Lawrence river.
Perham again accumulated money
and possessed a considerable fortuno
when the vision of a railroad to the
Pacific dawned upon him in 1853. He
did not first go to congress for aid.
His idea was that the people of the
whole country wpuld rush forward to
subscribe small sums for stock which
would aggregate enough to construct
the road.
Even the most discouraging expert-
ences failed to dislodge this idea from
his mind. His first scheme was for a
railroad from the Missouri river to the
bay of San Francisco, and he held
firmly to this route for nearly ten
years, until congress, in chartering the
Union Pacific in 1862, left him and his
project and friends entirely out of the
deal. Only then did he turn to the
northern route. He rallied around him
old friends in Boston and Maine and
organized the People's Pacific Railroad
company. The amount of stock sub
scribed and paid for was very small.
Perham failed to get a land grant
from congress for this company, and, at
the instance of Thaddeus Stevens, then
the dictatorial leader of the Republican
party in the house, a new bill was pre
pared creating by national charter
the Northern Pacific Railway company
and naming as incorporators a long
list of Perham's best friends in Maine
and Massachusetts. This bill finally
passed and was signed by President
Lincoln on July 2, 1864. It gave no
money subsidy, but it gave a land
grant of unprecedented and enormous
extent, embracing every alternate sec
tion for twenty miles on both sides
of the road in the states to be trav
ersed by the line and for forty miles
in the territories. One hundred and
thirty-five persons were named as com
missioners to organize the company.
The list included the names of many
governors, United States senators and
congressmen, the general of the army
of the United States, U. S. Grant, a
few active railroad managers and a
sprinkling of capitalists. The commis
sioners met in September, 1564, at Melo
deon hall, Boston. Only thirty-three
of this body were present. Mr. Perhair-.
was elected president of the company.
He estimated the cost of the entire
road at $120,000,000, and was not far cut
of the way.
The charter required 20,000 shares of
stock to be subscribed for before the
complete organization of the company.
Perham thought that most of the
shares would be taken at once, but
there was considerable difficulty ex
perienced in getting the 20,000 taken,
and this amount was only exceeded by
seventy-five shares. The board of com
missioners now went out of existence,
and a board of directors was elected.
The company started with $2,750 in its
treasury, received from a 10 per cent
payment of its stock. This was all that
was ever paid; the other remaining 00
per cent was called for six years later,
but the stockholders declined to pay it,
alleging that their services entitled
them to the stock without further pay
ments. The board then in control of
the company thereupon confiscated the
whole amount of the original subscrip
tion. Perham had no further plan for
raising money to commence the con
struction of the road, and the great
enterprise went to sleep for a time, all
efforts to interest New York capitalists
in it having failed.
Col. William S. Roland appeared in
Boston and New York in 1865 in com
pany with Gov. Fuller, of Utah, and
these two men secured the co-operation
of Hamilton A. Hall, a merchant large
ly interested in Canadian trade. Their
plan was to use the Canada system of
roads as far as then constructed west
ward, and to persuade the Canadian
government to extend this system
around the lakes to the Red River of
the North, and then build the Northern
Pacific railroad on to Puget sound.
This, they argued, would make the road
tributary to Boston. This scheme met
vvith favor in that city. Stock to the
amount of $150,000 was subscribed there,
and the board of directors was reor
ganized. In place of Perham as presi
dent, John Gregory Smith was elected.
He was then president of tho Vermont
Central road, and was well known in
railroad circles throughout the country.
All the other officers were changed.
The new organization was strong in its
personality and the capital it repre
sented. The new directors, however,
did not expect to put any money up for
building the road. They only agreed to
pay off the debts of the Perham organi
zation. Their object was to get money
from congress. Nobody at that time
would take the bonds of a Pacific rail
road company unless they were in
dorsed by the government, and there
was no market for the Northern Pa
cific stock put out by the new directors
to pay Perham's debts. Perham died
in 1868, a poor man, having wasted his
fortune in a fruitless effort to carry out
his grand Pacific railroad idea.
J. Gregory Smith now came into ac
tive control of the Northern Pacific
company. His first move was to make
an effort to obtain from congress an
indorsement of the bonds of the com
pany. It was a bad time for such an
attempt. Hostility to land grants had
become a political cry throughout the
country. Besides, the Northern Pacific
had no local strength outside of New
England and Minnesota.
All that could be obtained from con
gress was an extension of time for
building the road. An amendment was
put upon the Kansas Pacific bill by
Thaddeus Stevens, extending the time
two years for the completion of the
Northern Pacific. There was already
strong opposition in congress, organized
by the friends of the Union Pacific
against giving aid to a rival line, and
the guarantee bill supported by Sta
vens was tabled by a vote of 76 to 58.
The company was then thrown upon
its own resources. Mr. Smith could not
raise any money in New England, and
New York capitalists were wholly in
different to the scheme. Smith then
conceived a plan of creating a railroad
syndicate, embracing many of the lead
ing railroads of the country. He en
gaged Thomas H. Canfield to interview
railroad presidents and to endeavor to
get their co-operation. The first en-
listed was William B. Ogden, president
of the Chicago and Northwestern rail
road, who aided in drawing up a finan
cial plan, afterward known as The Or
iginal Interests agreement, which di
vided the enterprise into twelve shares,
each to be valued at $8,500, which was
one-twelfth of the money already ex
pended by Smith and his associates.
Falling to obtain any money or the
indorsement of their bonds from con
gress, President Smith and his friends
now undertook to secure the services
of the great banking house of Jay
Cooke & Co. to sell the Northern Pa
cific company's bonds and to manage
its finances. This house had success
fully handled the immense war loans
of the government, and was very fav
orably known on both sides of the At
lantic. Mr. Cooke agreed to raise $5,
--000,000 within thirty days from Jan. 2,
1870. The building of the road was
commenced at once, but as the bank
ing firm already controlled the rail
road then being built from Duluth to
St. Paul, it was agreed that twenty
miles of that line should be used by
the Northern Pacific. So great was the
influence of Jay Cooke in Philadelphia,
that he raised the $5,000,000 within
thirty days by forming a pool, the
members of which took the bonds at
par and were given the twelve proprie
tary interests in the stock at $50,000
each. In this transaction Jay Cooke &
Co. made an immediate profit of $600,
--000 on the bonds, for which It had paid
8S cents, and $600,000 on the stock, for
which the firm had paid nothing. Mr.
Cooke went to Washington in the face
of strong opposition to secure the pas
sage of another resolution authorizing
the mortgaging of all the property and
rights of the company and the issue of
bonds. This resolution also made the
Columbia river line the main one, and
that from Puget sound to the Cascades
a branch line. It also gave the com
pany the right to select lands within
the limit of ten miles on each side of
its grant. The grant was thus prac
tically enlarged to tracts of thirty miles
in the states and of fifty miles in the
territories on each side of their line.
Next spring Mr. Cooke met at a din
ner party in Washington two young
bankers connected with good houses in
Amsterdam and Berlin, and Interested
them so far in the Northern Pacific
plans that after visiting him at his
country house they drew on their
banks for a half million dollars and
deposited the drafts with Mr. Cooke,
agreeing that their banks would take
$5,000,000 of the loan. This plan was
on the point of being completed when
the French emperor started with his
army for the Rhine and began his dis
astrous attack upon Germany. Then
the whole transaction came to an end
and Mr. Cooke was compelled to fall
back on the American market. He set
going his advertising and local agen
cies which he had used In placing the
government loans, and was successful
In making large sales of the Northern
Pacific bonds.
The actual work of building the road
was begun in the summer cf IS7O at a
point about twenty miles west of Du
luth, called Thompson's Junction.
During the summer of 1870 and the
whole of 1871 money poured Into the
treasury of the Northern Pacific for
its bonds under the sale of them by Jay
Cooke & Co. In less than three years
$30,000,000 were raised. The road was
finished to the Red river of the North
in 1871, and twenty-five miles were
built north from the Columbia river
toward Puget Sound. In 1872 the road
was open for business from Duluth to
the new town of Fargo, on the Red
river. J. Gregory Smith continued to
direct the affairs of the company, but
was at all times under the dominant
mind of Jay Cooke. It was, of course,
Cooke who brought about the leasing
of the entire line of the Lake Superior
and Mississippi railroad, running from
Duluth to St. Paul, and the purchas
ing of nearly an the steamboat lines
on the Columbia, Snake, Willamette
rivers and Puget Sound, which gave
the Northern Pacific Railroad company
clear possession ,of all the transporta
tion facilities then existing in Wash
ington and Oregon. *'
All of this activity and buoyancy
came to a sharp and sudden end in
the general and financial crisis of 1873.
Already in 1872 the general company
began to be pressed for funds for go
ing on with the work. The road was
built across the then unsettled prai
ries of North Dakota, as far as the Mis
souri river, and halted at the new
town of Bismarck. Money was spent
lavishly after the manner of railroads
in boom times. All construction was
inordinately expensive. In 1572 Jay
Cooke & Co. informed the board of
directors that the company was al
ready in financial straits, and a loan
must be raised on the credit of each
individual member. The short line
from the Columbia river to Puget
Sound was only completed by the ac
tion of Charles B. Wright, of Philadel
phia, who bought the last ship load of
rails and sent them out at his own
risk. President Smith resigned in 1872,
fearing the calamity that was impend- ]
ing, and was succeeded by George W.
Cass, of Pittsburg. an energetic rail
road man of large experience in the
new railroad development of the West.
The failure of Jay Cooke & Co. was
followed by another period of inactiv- I
ity and practical insolvency of the af
fairs of the Northern Pacific. No more
bonds could be sold. The road had
been built westward from Lake Super
ior to Bismarck, a distance of about
450 miles. There was little popula
tion along it to support it. It was
found that if the company were to go
ahead and borrow more money it must
in some way escape from the burden
of its existing debts. Frederick Bil
lings, of Vermont, came to the rescue,
with a plan of reorganization, which
he urged persistently on all persons in
terested in the road whom he could
reach. The plan was to take up all
the $30,000,000 of the outstanding 7-30
bonds with new preferred stock, of
Which $51,000,000 was to be issued, and
also an issue of $43,000,000 in common
stock, to be divided among the holders
of the original proprietary interests.
The common stock was to receive no
dividends until after the preferred
stock had earned 8 per cent per an
num. As there was five years of un
paid Interest due the holders of the old ]
bonds, it took $42,000,000 of the new j
preferred stock to satisfy their claims;
the remainder was put in the treas
ury for various purposes.
This plan was successfully carried
out, and all the old bonded debt was
converted into the new preferred stock.
Thus the Northern Pacific Railroad !
company got itself out of debt, and
found itself in possession of 575 miles
of road free from ineumbrance, and of !
10,000,000 acres of land. The cost of j
this reorganization was trifling, and i
the bankruptcy proceeding.; were car- !
ried forward so rapidly in the courts j
and with sagacity and harmony that j
the horde of wreckers and plunderers
who usually pounce upon the fallen cor
porations was completely baffled.
In 1874, when Gen. Ca?s, who had done i
much to promote the settlement of the .
Red river valley, resigned the presi- i
dc-ncy, Charles B. Wright, of Philadel
phia, was elected to the place. He had
been a merchant arid banker in his |
early life in Erie, Pa., and had been
actively concerned in the building and ;
management of the Philadelphia and
Erie • railroad. He was a shrewd, cap- !
able financier, and a strict economist, j
and was well adapted by experience
and disposition to nurse the Northern
Pacific through the hard times which !
followed the panic of 1873, and to get
It upon its feet again. He succeeded in i
close of 1876, Mr. Wright was able to I
making the road pay expenses. The \
trains ran only to Fargo for two win- ■
ters, and during the third winter the j
terminus was at Jamestown. At the j
show the directors that the road had ;
not only paid its way, but had left a |
surplus of $300,000. The value of the j
great Northwestern prairies for wheat !
growing was now fully established, and j
thousands of settlers moved in to oc- ;
cupy the new country.
In 1877 provision was made for direct
connection with" St. Paul by the con
struction of a short) link of road in j
North Minnesota from Sauk Rapids to j
Brainerd. By IS7S .the general business j
condition of the ,couQ,try had so far im- i
proved that it w«.s determined to make !
an effort to raise money for continuing j
the construction of the main line of the
Northern Pacific westward from Bis- j
marck. This was .done by issuing ;
bonds secured by a -mortgage on the
Missouri division, from the Missouri i
river to Glendi^e ori: the Yellowstone, j
The Missouri lo#n Was speedily taken |
in 1879, and thai work of construction
westward from Bismarck was actively
carried on.
Under Mr. Billings preliminary work
had been begun on the Pacific coast
with money raised by selling what are
known as Tend d'Oreille bonds. This
loan amounted to $4,500,000. Instead of
beginning the construction at Portland,
the chief city of the northwest, a seri
ous mistake was made by commencing
it at the junction of the Snake and Co
lumbia rivers, where the town of Pasco
now stands. From this point to Port- |
land a route of travel had been opened l
by steamboats and by short portage j
railroads around two rapids in tho
river. The company determined to us? j
this disjointed route for its Portland
connections and to -employ its resources j
in building its main line from Wallula ]
to Spokane Falls and farther east to j
Lake Pend d'Oreille in Northern Idaho.
President Billings enlisted the friend- !
ship of Winslow. Lanier & Co.. of New j
Ycrk for the Northern Pacific. This |
firm associated with itself in the sale j
of the new bonds the house of Drexel, !
Morgan & Co., of Philadelphia and New
York; the firm of A. Belmont & Co.,
joined the movement later, and for
many years afterward these three
strong houses were the chief financial I
backers of the Northern Pacific com- j
pany A new general mortgage was i
prepared and $40,000,000 of bonds were
issued and sold on it. This financial
scheme was thought to be a great suc
cess at the time. President Billings
was congratulated by President Hayes,
Gen. Sherman, Gen. Hancock and other
prominent men. ; The work of construc
tion was now pwshed.with great vigor.
In the meanwhile a very able rail
way promoter and organizer had ap
peared on the Pacific; coast. This was
Henry Villard, ai German by birth, who
first became kn&wn in this country as
a war correspondent of the New York
papers during 6ur Qh'il war. After
ward he was intrusted by German
bondholders with tne financial man
agement of the Kansas Pacific rail
road. After succeeding in this work
he was sent ofit td 1 ! Oregon by the
same financial interests to take charge
of the Oregon and California company,
then in bankruptcy. Mr. Villard saw
that a capital error had been made by
the Northern Pacific management in
beginning the construction of their
road at a point 250 miles west of Port
land, and he determined to take ad
vantage cf it. He organized the Ore
gon Railway and Navigation company,
obtained control of all the steamship
and portage railroad interests which
the Northern Pacific had dropped, and
commenced the building of a road up
the southern bank of the Columbia
river from Portland to "Wallulu, then
the initial point of the Northern Pa
cific. He saw that the only open gate
way through the great barrier of the
Cascade Mountains was that of the
gorge of the Columbia river, and of
this he took possession; so that any
railroad coming from the east and
wishing to reach the tide water of the
Pacific would have to deal with him or
else build a very expensive line over
the Cascade Mountains. After com
pleting his railroad on the Columbia
river he came to New York, and made
one of the boldest and most successful
strokes known in the history of Wall
street. He formed what was known
as a "blind pool," by inviting about
fifty capitalists to subscribe toward a
fund of $8,000,000, in order to enable
him to lay the foundation of a certain
enterprise, the exact nature of which
he would disclose thereafter. The mys
tery of this announcement appeared
to be an irresistible attraction, and
the result was that one-third of the
persons asked to join the pool signed
the full subscription list before the list
could reach the other two-thirds. Then
a great rush of applications for the
right to subscribe ensued. Within
twenty-tour hours after the issue of
the circular more than twice the
amount asked was applied for.
Men thronged Mr. Villard's office
and pleaded for a participation in the
scheme that had been allotted to the
others and became angry because he
would not take their money without
security for investment in a project,
the nature of which had been care
fully concealed. The $9,000,000 was
promptly paid in, and with this money,
Mr. Villiard proceeded to buy the stock
of the Northern Pacific, then at a very
low price. Soon after he asked for
$12,000,000 more, so that in all more
than $20,000,000 in money was actually
put into his hands. He organized the
Oregon and Transcontinental company
for the purpose of uniting and controll
ing the Northern Pacific and the Ore
gon Railway and Navigation compan
ies. The success of this remarkable
project placed Mr. Villard in control
of the Northern Pacific. Mr. Billings
resigned the presidency and Mr. Vil
lard was elected to that office. His
administration was marked by an
epoch of rapid construction and gener
al expansion. He leased the Oregon
and California railroad, organized a
terminal company at Portland infus
ed great vigor and activity into the
work of building the main line. Late
in the summer of 1883 the long lines
of the Northern Pacific advancing
from the east and west up to the two
slopes met at the summit ridge of the
Rocky mountains. The completion of
the road was celebrated by an excur
sion that was without parallel for its
magnitude and magnificence in the
history of railroad building. Mr. Vil
lard invited a large number of prom
inent statesmen, journalists and finan
ciers from Europe to take part in this
event. He also invited many promin
ent senator? and members of congress,
the governors of all the states trav
ersed by his road, and a considerable
number of leading American journal
ists, artists and railroad men. This
great party of excursion^ts was haul
ed in four trains, made up of sleepers,
private and dinning cars. Three of
these trains started from Minneapolis
and ono from Portland. The last spike
was driven at Gold Creek, in Montana,
in September, 1883, amid much ora
tory and cannon firing. The expenses
of the visitors were all paid by the
company from the time they left their
homes until their return.
While Mr. Villard was conducting his
army of friends across the plains to
the Pacific coast the bears of Wall
street began a determined attack upon
the securities of. the Northern Pacific.
Notified of this movement by wire, the
president of the company hastened to
New York by special train and threw
himself into the battle, making tre
mendous efforts to sustain his stocks
and to prevent their further deprecia
tion. For this purpose he sacrificed
his private fortune, but with no avail,
for the decline continued, and he was
finally forced to withdraw from the
An era of contraction and stringency
set in which had its effect on railroad
securities. Against this general strin
gency the friends of the Northern Pa
cific were powerless. Broken in health
and spirits, Mr. Villard retired from
the Northern Pacific presidency and
went to Europe for rest. The preferred
stock of the company, which had
reached par during the spring of ISS3.
declined to 40. and even the bond?-,
which were amply secured, were look
ed upon with distrust.
With Mr. Villard's retirement, his
splendid plan for making all transpor
tation lines on the Pacific coast and in
the Northwest tributary to the trans
continental line of the Northern Pa
cific speedily fell to pieces. He had
already shut off the Union Pacific from
entering Oregon by building a line of
his Oregon Railway and Navigation
company eastward over the Blue
Mountains to the Snake river, where
it intercepted the construction of thfc
Oregon Short line of the Union Pa
cific road. He had kent the Southern
Pacific out of Oresron by extending his
Oregon and California line to the Cali
fornia boundary. He had captured, as
we have seen, the Northern Pacific.
All lines in Washington and Oree-on
were thus virtually under the control
of this financial company known as the
Oregon and Transcontinental.
Mr. Villard was succeeded in the
presidency by Robert Harris, of New
York, a railroad man of long exper
ience, on the Burlington system in the
West and on the Erie road in the East.
Mr. Harris' administration, which
lasted about three years, was chiefly
remarkable for the construction of the
Cascade branch of the Northern Pa
cific, which reduced by ever 100 miles
the distance to points on the Puget
sound. A practical pass was found in
the mountain range, and, by the aid of
a tunnel over a mile in length, the
road was carried accross the moun
tain on grades not exceeding a maxi
mum of 2 per cent. The construction
of this line was rendered imperative
by the fact that the Northern Pacific,
when the Oregon Railway and Naviga
tion company passed into the hands of
the Union Pacific, found itself bottled
up at Wallula, with no access to the
sea save over the road of a rival com
pany. The Union Pacific demanded
high prices for hauling Northern Pa
cific freight and passengers from Wal
lula to Portland. By the building of
the Cascade branch the company earn
ed its land grant on this line, and
found itself in excellent condition tG
compete with all rivals for Pacific
coast business.
In 1886 Henry Villiard returned to
America backed by fresh German cap
ital, and began again to take an active
interest in Northern Pcific affairs.
He was selected chairman of the beard
of directors, and his old friend and as
sociate, Thomas F. Oakes, who had
served with him in railroad work in
Kansas and Oregon, and who was
then general manager of the Northern
Pacific,, was promoted to the presi
A second mortgage was now placed
upon the road, and an extensive
scheme of building branch feeder lines
was undertaken. Mr. Oakes' close
familiarity with the topography and
resources of the country traversed by
the Northern Pacific enabled him to
Influence the board in favor of build-
Ing numerous branches, which had to
iepend largely upon future develop
ment for their earnings. At that time
the great railway systems of the West
svere all engaged in branch construc
tion. The Northern Pacific went too
Car in this direction, but it can hardly
I New Diamond Parlors, §
One Door Above Our Old Location. «7
Q5 Our store is new, fresh, light, bright and neat, and *^
our goods are the same, except, we will add, they are very
r± cheap. We recently bought the stock of goods of W. B. r*
S Smith, in the Arcade, from the assignee; this, being a ?k
bankrupt stock, for less than one-half of first cost. The 3g
goods consist in part of ]JP
« Silver and Gold Novelties, Solid Silver,
Hollow and Flat Wear, Rings, Pins, Brooches, S
in fact all kinds of Jewelry, that we are selling for just
one-half that Mr. Smith marked them to sell for. l 5
*O Our stock of Diamonds is larger than ever before. We ©
catl save you from 35 to 40 per cent in Diamonds, and from
Qk 35 to 50 per cent in Watches and Chains. £}• Lytle, Dia- Qh
n^ mond Broker, established business in St. Paul in 1875. Rfc
jQ Money loaned on Diamonds and other first-class goods. £Z
Watch repairing, diamond setting and jewelry made to 17
VO order. Goods sent C. O. D. with privilege of examination xy
to outside parties.
$ 415 ROBERT ST., g
be condemned for following the gen
eral fashion of the times. The new
branches in North Dakota, Minnesota,
Manitoba, Montana, Idaho and Wash
ington nearly doubled the original
mileage of the Northern Pacific, in
creasing it from about 2,000 miles to
over 4,000 miles. All of this construc
tion added very heavily to the fixed
charges of the road. The branches
were financiered by organizing inde
pendent companies and issuing bonus
which were guaranteed by the North
ern Pacific. There was a universal era
of expansion and speculation at that
time in all parts of the "West. Imml
gi&tion was rapidly pouring in, scores
of new towns were built, new mines
were opened, factories constructed, and
the fever of business activity every
where prevailed. The earnings of the
Northern Pacific advanced with great
rapidity and culminated in 1891 at $25,
--000,000 gross. The bonded debt of the
company at the same time increased
enormously and now reached the grand
total of $156,000,000. The fixed charges
amounted to nearly $10,000,000. For
several years the net earnings equaled
this heavy sum, but there was already
a cloud in the financial sky. Immigra
tion to the Northwest began to fall off.
The land sales of the company, which
had for several years been exceeding
ly large, deereas-d steadily. Poor crops
seriously diminished the earnings of
the road, and the financiers of the com
pany saw that there was no way to
escape impending bankruptcy. This
was hastened by the general financial
crisis of 1893, which produced a great
stringency in the money market and
forced a large number of railroads into
When it became evident that the Northern
Pacific could no longer earn its fixed charges
steps were taken to secure from the federal
court at Milwaukee, presided over by Judge
Jenkins, the appointment of receivers who
would be friendly to the interests of the
corporation. Bankruptcy proceedings were
hurried through and a receivership was con
stituted, consisting of Thomas F. Oakes,
president of the Northern Pacific; Henry C.
Payne, a Milwaukee financier, and Henry C.
Rouse, a practical railroad man living in
Cleveland. The receivers took charge of the
property and operated the road for about
three years. They unloaded aJI the dead
weight of unprofitable branch lines, throwing
these lines into the hands of their bondhold
ers. The actual management of the road was
placed in the hands of J. W. Kendrick, its
former chief engineer. Many legal complica
tions grew out oi the receivership, the most
notable of which was an effort made by
Judge Hanford, of Taeoma, to seize upon the
Western lines of the company and to create
for them an independent receivership. He
appointed a receiver to act wltblV his juris
diction. This gentleman was wise enough,
however, not to break the Northern Pacific
into two sections, and he consented to have
the treasurer and auditor in St. Paul act for
the entire line. The receivership was finaliy
terminated in the summer of 1M!»6 by a suc
cessful pian of reorganization formed by Ed
ward D. Adams, of New York, which was
carried into effect by the banking house of
J P. Morgan & Co. Tnder this plan a fore
closure suit was had and the entire property
of the Northern Pacific Railroad company was
sold to a new corporation called the Northern
Pacific Railway company. The old bonds
were called in and exchanged for new bonds
bearing lower rates of interest, and the old
stock was also taken up and new stock Is
sued. The general financial result of the re
organization was to induce the fixed charges
of the company from about $9,000,000 per
annum to about $0,(«jO,000. This brought tha
annu,l interest charges down to a figure not
greater than the lowest amount of net earn
ings made by the road in the year of the
greatest business depression.
During the Villard regime an ambition to
make Chicago the eastern terminus of the
Northern Pacific ltd its management to make
a long lease of the Wisconsin Central line 3
extending from St. Paul to Chicago, and to
enter into a scheme for terminal facilities in
the latter city and for short lines extending
to the suburbs. A company called the Chi
cago and Northern Pacific was formed to
build and to acquire such lines and to con
struct the terminal Improvements. North
ern Pacific through trains now started from
Chicago. While some prestige was gained in
railway circles by this movement, the scheme
proved to be financially unwise. There are
six railway lines between Chicago and St.
Paul and the acquirement of the longest of
these by the Northern Pacific had a natural
tendency to arouse unfriendly feelings in the
management of the other five, and it coused
them to divert a great deal of their Pacific
coast freight and passenger traffic from the
Northern Pacific to its rival, the Great
Northern; thus the Wisconsin Central lease
proved a financial burden instead of an ad
vantage, and the receivers made haste to
abandon it.
The plan of reorganization advised and
carried out by Mr. Morgan and Mr. Adam 3
was worked through expeditiously and with
complete success. It was entirely fair toward
all interests and the stock and bond holders
accepted it with general satisfaction. E.
W. Winter, general manager of the Chicago,
St. Paul, Minneapolis & Omaha road, was
elected president of the reorganized com
pany and the Northern Pacific started out
on what appeared to be a new career of pros
James J. Hill, of St. Faul, president of the
Great Northern Railway company, is a man
of remarkable energy and ambition, of a very
thorough and practical knowledge of railway
operations. Iv ISSS he conceived the idea of
uniting his own road to the Northern Pacific
under one general management, and of thU3
obtaining complete control of the railway
situation in the Northwest. The united roads
would have over 10.000 miles of track, and
would be the great dominant transportation
power in the entire country lying between
Lake Superior and the Pacific coast. For this
plan Mr Hill obtained assistance of the
plan Mr. Hill obtaimd the assistance of the
Deutsche bank, of Herlin, the heaviest for
eign holder of Northern Pacific securities.
He proposed that the Great Northern should
guarantee $3,500,000 net earnings from tho
Northern Pacific for its bondholders, and that
he should be put In full possession of the
;reat rival route which competed with the
Great Northern at almost every important
freight and passenger poiDt lv tho Northwest,
rhis gigantic plan of consolidation was in a
[air way of going foiward to success when
it was vigorously attacked in New York city
papers In articles tl.at pointed out it 3 illegal
ity and quoted the stctutos of several of the
aorthwestern states wbich prohibited the con
solidation of parallel and competing lines of
railway. At the samo time the attorney gen
eral Of tie Batto of illim-sota, H. W. Cliilds,
applied for an injunction in Judge Kelley'a
court. A "friendly suit" had already been
put through the United States court at tha
instance of Mr. Hill and a decision obtained
to the effect that the proposition for a con
solidation was not unlawful.
In the state court Mr. Childs was met with
a great array of legal talent, headed by a
United States senator. He won a complete
victory, however. Judge Kelly decided that
the Northern Pacific and the Great Northern
roads were parallel and competing lines In
the meaning of the statute, and could not
be brought under one management. This
decision alarmed the German bondholders
represented by the Deutsche bank, and tha
whole project fell through for a time. Mr.
Hill Is not the sort of a man, however, that
accepts one defeat as final. His next move
was to enlist the backing of large English
and American capitalists, to buy blocks of
Northern Pacific stock. In order to secure
such a heavy ownership in the road that it
would entitle him to an influence in its man
The stock was purchased by Mr. Hill and
his friends, and he was again assured of tha
co-operation of the Deutsche bank. Presi
dent Winter resigned as soon as he was ap
prised of the condition of affairs, not de
siring to serve under Mr. Hill. The plan of
creating a Northwestern railway dictatorship
failed of success, owing to the attitude of J.
P. Morgan, who was not willing to pass over
his own control of Northern Pacific affairs!
to Mr. Hill. When a successor was appoint
ed to Mr. Winter, a compromise agreement
was reached by which Mr. Morgan named
Charles S. Mellen, vice president of the New
York, New Haven & Hartford railroad, for
president of the Northern Pacific, and Mr.
Hill was allowed to select the vice presi
dent, naming Daniel S. Lamont, ex-secretary
of war, who had been his choice for the pres
idency of the road. As matters now stand
Mr. Hill and his friends have a strong in
fluence In Northern Pacific affairs, owing to
their heavy holdings of the securities of tho
company, but it is announced that the man
agement In the hands of Mr. Melien will be
entirely Independent, and that the two sys
tems will continue to be operated in a com
peting manner.
The building of the Northern Pacific was
coincident with the development of our en
tire northern belt of territory, extending
from Lake Superior to the Pacific ocean.
When the road was started In JS7O there
were probably not 10.000 people living In the
country it was to traverse. Now there a"ho
500,000 In Northern Minnesota, nearly 300,000 in
North Dakota, 200,000 in Montana, 130,000 in
Idaho, and 400,000 in Washington, and 400,000
in Oregon. All this enormous settlement bf
a recent wilderness can be credited to the
building of the Northern Pacific. The road
has thus been a very great factor in national
growth. The 11,000 men and women who
originally subscribed for its first bends at
the instance of Jay Cooke, have never re
ceived any dividend for their investment.
They have waited a long time, but as holders
of the new preferred stork they may expect
to get a dividend next year. Tho road la now
well manged and has plenty of business to
do, and ought to m»ke a profit over it 3
fixed charges.
Special Carnival Trains.
For the accommodation of the peo
ple of Oakland, Highwood, Red Rock,
Newport and St. Paul Park, who wish
to witness the Carnival displays dur
ing State Fair week, the Burlington
will, on Tuesday, Wednesday, Thurs
day and Friday evenings, Sept. 7, 8. 9
and 10, run a special evening train,
leavtag Pullman avenue at 7:25 p. m.
and returning leave St. Paul union
depot at 11:20 p. m. The late traip
Saturday evening will run aa usual.
Farmers Delimited by the Rise In
Their Products.
WASHINGTON, Sept. 4.— C01. Brig
ham, assistant secretary of agriculture,
has returned from a trip to New Eng
land. He reports that the people of
the section generally express thi rn
selves as pleased with the change that
has taken place in industrial condi
tions. While the farmers are especial
ly delighted on account of the en
hanced value of their products, there
is no disposition on the part of others
to grumble because they have to pay
more to the farmers, as they realize
that their markets will improve as the
condition of the agricultural interests
Inprove. Col. Brigham holds to the
opinion that the aggregate value of the
entire crop of the country will be al
most if not quite half a billion dollars
in excess of that of last year, and saya
that such a turn in the affairs of the
farming community must of necessity
produce improved conditions through
out the country-
85351 gsa pfe dp*

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