Compendium history and biography of North Dakota; a history of early settlement, political history, and biography; reminiscences of pioneer life, Part 23

Author:
Publication date: 1900
Publisher: Chicago, G.A.Ogle
Number of Pages: 1432

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"Josiah Perham, the first president of the North- ern Pacific, was a marked character. Of a specu- lative turn of mind, he was given to ideal schemes. He was the author of the gift enterprises of twenty- five years ago. A resident of the state of Maine, at an early date he badgered the legislature of that state into granting him and his associates a charter for a railroad from Maine to the Pacific ocean. Of course it was worthless, but he came to Wash- ington with his People's Pacific Railroad Company charter in his pocket, and on the 16th- of April, 1870, petitioned congress for the right of way and grant of lands in aid of his pet project. Among others at Washington he encountered Thaddeus Stevens, of Pennsylvania, then, as ever, a friend of the northern route to the Pacific. Stevens induced Perham to abandon his Maine charter and get up a congressional bill for a Northern Pacific road. At that time Huntington and others were busy with the Union Pacific scheme. Stevens was the chairman of the Pacific railway committee in the house. He introduced a resolution into that committee propos- ing a northern line contemporaneously with the other proposed Pacific routes. The resolution passed. The result of it was a bill. This bill went to the house and was defeated by eighteen votes. Stevens was angry. As chairman of the committee he held the key to the situation. He plainly told Huntington and his friends that they had permitted the defeat of the measure. It is said that he further told them that he should hold their bill in his pocket till the Northern Pacific bill passed. The result was that the bill subsequently passed the house. It never was printed. It was read perfunctorily as

such bills are, and the ten sections per mile were mysteriously increased to twenty. It went to the senate and unanimously passed that body. Perham organized his company; of the stock he had a con- trolling interest. He failed to accomplish anything and died a poor man. After his death the stock was gathered up, and the enterprise, in new hands, was warmed into new life. Thaddeus Stevens, the old Roman, was the real father of the Northern Pacific charter. Others had advocated the enter- prise, but under his sovereign wing the bill had its life.

"On the 2d of July, 1864, Abraham Lincoln signed the charter for the Northern Pacific Rail- road. The act of incorporation was reported at the last session of the thirty-eighth congress by the select committee on public lands, of which Thaddeus Stevens, of Pennsylvania, was chairman, and Ig- natius Donnelly the Minnesota member. This charter authorized the construction of a railroad and telegraph line, 'beginning at a point on Lake Superior, in the state of Minnesota, thence west- erly by the most eligible route within the territory of the United States on a line north of the forty- fifth degree of north latitude to some point on Puget sound, with a branch in the valley of the Columbia river, to a point at or near Portland, in the state of Oregon.' The charter granted the right of way through the public domain ; also alternate sections of land for twenty miles on each side of the road, except mineral lands, upon conditions similar to those contained in other like grants. Some amendments to this charter, relating chiefly to an extension of time, the construction of branches, and the issuing of bonds secured by mortgage, were granted subsequently.

"The valuable, earnest and persistent support of the Minnesota delegation in congress to this great measure must not be forgotten. As early as De- cember 20, 1858, the Hon. H. M. Rice delivered an able speech in the senate in its behalf. January 7, 1859, Hon. James Shields, then a senator from this state, delivered a speech in the same body in its sup- port. On January 5, 1869, Hon. William Windom delivered a very able and extended address in the house in its advocacy. Alexander Ramsey was al- ways conspicuous for earnest efforts in its behalf ; so was Hon. Cyrus Aldrich and Hon. Ignatius Donnelly. Indeed, it is very doubtful whether the measure would have succeeded without the patient, intelligent and persistent efforts of the Minnesota delegation in congress. Active, earnest and hope-

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ful, they carried force and conviction in each house, and very largely contributed to its final accomplish- ment.

"The congressional charter contained a provis- ion creating a representative commission from each state and territory, which should constitute the 'board of commissioners,' and their first meeting was authorized to be held at 'Melodeon hall,' in the city of Boston. In that commission of corporators Minnesota was represented by Cyrus Aldrich, H. M. Rice, John McKusick, H. C. Waite and Stephen Miller. The first meeting of the commissioners was held at Melodeon hall, Boston, September 1, 1864, and they proceeded to elect the first permanent offi- cers, with the following result: President, Josiah Perham; vice-president, Willard Sears; secretary, Abiel Abbott ; treasurer, J. H. Withington. Books were ordered opened for subscriptions to the capital stock, and a cash payment thereon of ten per cent. was required. Over 20,000 shares were subscribed and ten dollars per share actually paid in. The secretary thereupon called a meeting of the sub- scribers to the capital stock, at No. 22 Merchants' . Exchange building, Boston, December 6, 1864, for the purpose of electing thirteen directors. The total number of votes cast was 20,073, and the following gentlemen were elected as the first board:

"Josiah Perham, J. S. Withington, A. W. Ban- field, Philander Reed, Ogden Holt, Richard B. Sewall, Willard Sears, Abiel Abbott, Nathaniel Greene, Jr., P. J. Forristall, John A. Bass, James M. Beckett and Oliver Frost. On the next day the new officers were elected, with Josiah Perham as president. On the 15th of September, 1864, the act of congress granting lands in aid of the con- struction of the road was formally accepted by the board and notice of the same served directly upon the president, Abraham Lincoln, who acknowledged the service in a personal letter. Thus the first act in the great drama of a northern railway to the Pacific was accomplished, and the mighty zone, stretching from Lake Superior to that wonderful archipelago, Puget sound, an empire in itself, was to be opened to civilization and the commercial des- tiny of Minnesota assured. As the railroad so chartered was required to obtain the consent of the legislature of any state through which any portion of it might pass, previous to the commencement of the construction thereof, the legislature of the state of Minnesota passed such an act March 2, 1865, with a proviso that said road should construct a line from the main line to the navigable waters of the

Mississippi river. The consent of the state of Wis- consin was given by an act approved April 10, 1865.

"Between the date of organization, 1864, and the year 1869, but little was done. In 1866 J. Gregory Smith, of Vermont, had become president. He was a man of decided ability, energy and per- fect faith in the success of the great enterprise. In that year Edwin F. Johnson was appointed en- engineer-in-chief, and he organized and placed in the field four separate corps of engineers. The meas- ures which had been inaugurated after the organ- ization to provide funds was a failure. Other lead- ing roads to the Pacific were offering better induce- ments in securities, for they not only had lands and bonds secured by mortgage, and also the bonds of the United States. After an ineffectual struggle to raise funds, application to congress was made December 17, 1867, when Alexander Ramsey pre- sented a memorial to the senate in behalf of the company. For two years, by facts and arguments, congress was urged to subsidize the road, and with the Northern project was now associated a Southern Pacific measure of like import. The enterprise, in different forms, was advocated by some of the fore- most men of the nation. The continued discussions were able, but the public mind had become alienated as to subsidies, and even land grants, as a means of assistance, were persistently attacked. The land grant was magnified in importance; it was said to exceed fifty million acres, much larger in empire thnan the six New England states. Aid to rail- roads continued to agitate the people with intense feeling. Public opinion was against it, and con- gress reflected the public will. Appeals for aid were in vain. It became evident that if the North- ern continental highway was built at all, it must be constructed on its own merits.

"This condition of things existing, in 1869 the directors proffered to Jay Cooke & Company, of Philadelphia, the financial agency of the company. He had, contemporaneously, been offered the pres- idency of the Southern Pacific. But on a full ex- amination of the relative merits of the two enter- prises he had declined the offer. Before accepting the position of financial sponsor for the Northern line he caused a thorough investigation of the entire route to be made by skillful and trustworthy men.

"On the Ist day of July, 1870, for the purpose of constructing and equipping a line of railroad from a point on Lake Superior to the headwaters of the Missouri, a loan was sought to be effected on the security of a first mortgage bond on all the property

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of the company, lands included. It had been author- ized by a special act of congress, and to give national importance to the instrument it was made of record in the office of the secretary of the interior. The trustees of this mortgage were Jay Cooke and J. Edgar Thompson, president of the Pennsylvania Central Railroad Company, both of Philadelphia. To the placing of these securities Jay Cooke gave all his ability and experience.

"While negotiations were pending for a loan, Cooke advanced money, and the work was actually begun. On the 15th day of February, 1870, a win- ter's day, a company coming by sleighs from Duluth, Superior and other points assembled near Thomson Junction to formally break ground. Dr. Thomas Foster, of Duluth, was chosen president and delivered the address. The Rev. George Stutter offered prayer. A number of speeches followed. Colonel J. B. Culver, of Duluth, was appointed to fill the wheelbarrow with dirt, and Hiram Hayes, of Superior, to wheel it. These two cities divided the honors, but quarreled as to the direction it was to be wheeled. This was done amid great cheer- ing. The tools used, presented to the meeting by Captain Starkey, were all sent to Jay Cooke. The "sacred wheelbarrow' was on exhibition for some time. William Nettleton, Captain James Starkey, Luke Marvin, Colonel Belote, S. G. Sloan and J. J. Egan were the only persons present from St. Paul. Work was not seriously begun until the July fol- lowing. Captain Starkey was the contractor on the first section. The first spike driven is now in the possession of H. C. Davis, general passenger agent of the Manitoba line. The first engine used was the 'Minnetonka,' the first engineer, Adanı Brown; the first conductor, Captain W. B. Spauld- ing, now of Brainerd; the first brakeman, H. C. Davis: the first fireman, Charles Cotten, now an engineer, and the oldest in the train service of any man at present connected with the road.

"Jay Cooke is the most conspicuous character whose name is connected with the Northern Pacific Railroad enterprise. He was born in Sandusky, Ohio, August 10, 1821. In 1838 he entered the bank- ing house of of E. W. Clark & Company, of Phila- delphia, and at the early age of twenty-one became a partner. In 1858 he retired from business, but in 1861 he established the great banking firm of Jay Cooke & Company. He became the protege of Salmon P. Chase, then secretary of the treasury, and under the shadow of his great wing Cooke & Company floated and popularized the immense gov-

ernment loans made necessary by the war, and thereby contributed materially to the success of the Union arms. There was something phenomenal in his management of these loans. He succeeded in popularizing them in the darkest days of the war, by methods which were as new to the financial world as were those of Napoleon in the boldness of his military designs. While it was said in Europe that our military campaigns were full of blunders, our financial policy was pronounced a miracle of suc- cess. His pamphlet, 'How Our National Debt May Be a National Blessing,' will be remembered. He made the debt 'the orphans' and widows' sav- ings 'fund.' His method and success constituted an era in the history of American finance. This finan- cial ability, reputation and experience he brought to the great work of placing the loans necessary to the construction of the Northern Pacific Railroad. His claim as to the value of these securities and the importance of the road were by many, in that day, deemed chimerical. But time and great results have vindicated the correctness of his judgment and the soundness of his views. It was said to be the dream of Jay Cooke, after the close of the war, to connect his house with the Rothschilds, and thus secure their aid to place the Northern Pacific bonds on the continental market. The war in Europe dissipated that hope.

"On Thursday, the 18th of September, 1873, the banking house of Jay Cooke & Company closed its doors. It was represented by four great bank- ing houses, respectively located in Philadelphia, Washington, New York and the London house, under the control of Hugh Mccullough, late secre- tary of the treasury. The banks were overloaded with railroad securities at the time, and financial circles were imbued with a distrust of Jay Cooke & Company, because of their large connection with the Northern Pacific securities. They had prac- tically became the financial sponsors for the enter- prise. The house had made large advances for in- terest and construction. Europe had not then accepted these securities, as was expected. The fail- ure precipitated Wall street into the throes of panic. The great Chicago and Boston fires were yet fresh in their effects upon the country. The suspension fell like a calamity upon Minnesota. The firm was identified with an enterprise of vital importance to the state. It was felt that Jay Cooke was the only man in America who had the courage to under- take so great an enterprise as the construction of the Northern Pacific Railroad across the vast soli-

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tudes which stretch from Lake Superior to the Pacific ocean. He had devoted his whole energy and financial skill to the great enterprise, and the hopes and prayers of the great Northwest were with him. But his heroic attempt could not stem the tide of adverse popular distrust. The sale of the bonds at home had been slow, and the efforts to negotiate them abroad were comparatively un- successful. The St. Paul and Pacific main line and branches had defaulted in the payment of interest, and as their securities were mainly held in Hol- land and Germany, the market was prejudiced against any more railroad bonds. An epidemic of distrust generally spread among the holders of tlie bonds, who began to return them in 'large amounts to Jay Cooke, who was forced to buy them at par to maintain their credit. In his noble efforts to stay the tide of demoralization, we find the cause which led up to his suspension. He had now fully identified himself with the Northern Pacific enter- prise. To consummate this great achievement had become the main purpose of his life, and he pursued his object with generous and heroic ardor. It was an imperial civic ambition. But fortune was ad- verse, and he fell wounded in the great battle with the forces arrayed against him. His life insurance company and his transcontinental railroad were both ungenerously adjudged mistakes by the financial wiseacres of the day. He was said to be a man of vast ability, but too much controlled by his imagina- tion. It was said that Cooke was notable for ask- ing nobody's advice, and argued things out his own way; that he had organized a raid upon public credulity through the orthodox clergy; that he sought to popularize his bonds through the fictitious boosting of advertising; that his lands were worth- less, his road a failure and Duluth a mistake. He lived to see the ungenerous verdict of that day happily reversed. The lands are not worthless, Duluth is not a failure, and his transcontinental railway is an accomplished face. The securities were just as he represented them, and those who had faith or fortune to hold them have realized dollar for dollar, while others have amassed wealth in exchanging the depreciated bonds for lands.

"To the causes already recited we must add the array of hostile influences which arose from kindred projects. The Union Pacific and its associated en- terprises, alarmed at the prospect of the speedy diversion of a greater port of the transcontinental travel and traffic, set up a howl of denunciation of the northern route. They represented the country

as sterile and hyperborean. The great cities which participated in interest with the Union and Central Pacific route arrayed every influence which could affect public opinion against the enterprise. They made it the daily subject of malicious abuse and misrepresentation. Jealousy gloated in lampooning and villifying the entire enterprise. Slander did its work in weakening public confidence in the securi- ties. Further south a bitter sectional jealousy pre- vailed. These combined causes, for the hour, sus- pended the work and swept Cooke & Company, as by a cyclone, out of the financial world. Sitting in the shadow of his great disaster, Jay Cooke has lived to see his favorite and colossal project arise from the ruins at the call of other leaders, and move for- ward to its grand accomplishment; and it is pleasant to note that the first great sponsor of the enterprise, at last, from a home of competence, can behold the car of civilization move on its iron way along the northern zone, realizing the full con- summation of a purpose which had stirred his more youthful blood.

"The effect of the closing of the banking house of Jay Cooke & Company was temporarily disas- trous to the company itself. In its fiscal re- sources it had leaned wholly upon Jay Cooke. There was a faint hope that some other financial arrangement might at once be made with the prop- erties of the company, and that. hope was held out to the public. But it speedily proved delusive. In- deed, some newspapers predicted that the great enterprise would now be finally closed; that it was the explosion of a huge swindle, the bursting of a South Sea bubble. Some of the small-souled newspapers employed themselves by kicking the dead lion, in the person and fortunes of Jay Cooke.

"The explosion found the company, in the fall of 1873. in the possession of about five hundred and fifty completed miles of railroad. Of these, three hundred and fifty extended from Duluth to the Red river at Bismarck, and on the Pacific division one hundred and five miles, extending from Kalama, on the Columbia river, to Tacoma, on the Puget sound. It had earned ten million acres of land. The route had been surveyed entirely across the continent. Settlements were progressing finely. Indeed, all things were progressing favorably when the un- toward event of the Cooke failure overtook then. All the company's property of every description being covered by the mortgage, they had no security to offer for a loan. The default in accruing inter-

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est was unavoidable. The paralysis of the enter- prise was complete.

"George W. Cass had now become president. In their extremity, another appeal, May, 1874, was made to congress. By the conditions of the charter the completion of the road was required by the 4th day of July, 1877. They frankly declared their inability to complete the work. The entire sale of bonds had been over $30,000,000 ; on these they had realized, net, 83.13 per cent. Nearly the whole amount had been sold or taken by Jay Cooke & Company, under two several contracts. These con- tracts were terminated and the agency for that com- pany for the Northern Pacific railroad was at an end. The appeal was in vain. Congress adjourned without any definite action.

"The emperors of Russia have not been more determined to reach the Hellespont than the suc- cessive dynasties of the Northern Pacific to find a terminus on the Mississippi river. With this pur- pose in view many schemes were devised. First the purchase of the St. Paul & Pacific, with all its branches, was made in 1872. The Lake Superior & Mississippi (now St. Paul & Duluth) and the Minneapolis to St. Louis were leased. Had they contented themselves with holding and finishing these fine properties, their power and position in Minnesota would have been assured and complete at an early day. What might have been will sug- gest itself to all. In 1876-77 a second effort was made, and they secured the Western railroad by a lease from Sauk Rapids to Brainerd and by mak- ing running arrangements with the Manitoba from Sauk Rapids to St. Paul, thus found access to the Mississippi by a more direct route that by the St. Paul & Duluth. By a third effort, under the mas- terly effort of Villard, the whole question of reach- ing the Mississippi and the eastern railway con- nections at Minneapolis and St. Paul assumed the great importance its merit demands. The West- ern railroad has been purchased, together with the right of way from Sauk Rapids to Minneapolis lying east of the Manitoba line; and now, by the purchase the right of way, and at least one thou- sand acres of land in the vicinity of the capital of the state, such final connections and superb ter- minal facilities are projected as will enable them to give room for all other roads now or hereafter making connections with the great transcontinental line. Like the taking of Richmond, the head of navigation was not reached until the hour and the man had come.

"On the 16th of April, 1875, the United States circuit court of New York appointed a receiver of the Northern Pacific Railroad Company and all of its property. The order making this appointment was under proceedings brought by the trustees and the bondholders united. On the 12th of May, 1875, the trustees and bondholders applied for a final decree of sale, which was granted. Under the de- cree the road and all its property was to be sold for the benefit of the bondholders, who were to become the preferred stockholders. It was an arrangement made between all the parties in interest to avoid litigation and secure the extension of the road. The scheme was devised by a committee of the bondholders, one of which committee was William Windom, of Minnesota, and was adopted June 30, 1875. A committee of six stockholders was ap- pointed to attend the sale and purchase the property for the benefit of those in interest. The judicial sale, under decree of the court, took place August 12, 1875, and was confirmed by decree of the court the 25th of that month. The committee so ap- pointed and purchasing became the body politic and corporate known as the Northern Pacific Railroad Company. The holders of the preferred stock were instructed by the committee to meet in the city of New York, September 29, to elect a board of direc- tors. The holders of the common stock, by the agreement, had no right to vote until after July 1, 1878. At said meeting thirteen directors were elected by the preferred stockholders, and subse- quently Charles B. Wright was elected president ; George Stark, vice-president, and Samuel Wilkin- son; secretary. The reorganization was now com- plete. The bonds had been transferred into pre- ferred stock, and the latter made convertible into lands at par.

"No movement was made that year looking to a renewal of construction. Application was made to congress for an extension of time within which construction might be completed. The twenty-five miles of railroad used by the company between Thompson Junction and Duluth were built by the Lake Superior & Mississippi Railroad Company. To save a duplicate expenditure of money, the Northern Pacific had agreed to pay, for a half in- terest thereof, $500.000. The greater part of this remained unpaid. After a tedious negotiation, the mater was this year adjusted. The stock of the St. Paul & Pacific came over among the assets of the Northern Pacific; but the whole property had been encumbered by a heavy mortgage and was

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already in the hands of a receiver, and the property was lost to the new organization. Population was rapidly advancing west of the river, and many thousands of acres of wheat testified to the value of the land grant. Dalrymple, Cheeny, Grandin, and others had opened wheat farnis which had become the admiration of the world. The earnings of the road, both gross and net, were highly satisfactory. The intrinsic merits of the route were being made apparent. Preparations were made to run the Da- kota division in winter, as the war department had asked this in view of the military situation in the hostile Indian country.

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Compendium history and biography of North Dakota; a history of early settlement, political history, and biography; reminiscences of pioneer life, Part 23

Author: Publication date: 1900 Publisher: Chicago, G.A.Ogle Number of Pages: 1432

Author:
Publication date: 1900
Publisher: Chicago, G.A.Ogle
Number of Pages: 1432