History of Dakota Territory, volume I, Part 112

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920
Publication date: 1915
Publisher: Chicago, Ill. : S.J. Clarke Publishing Company
Number of Pages: 1198

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Captain C. E. Brooks and Anton Pfeiffer were added to the board as provided by a new enactment increasing the membership of the county board to five members.

At the election held April 25th, to authorize the bonds there were 821 votes cast-804 in the affirmative and seventeen against. The vote was unanimous in the City of Yankton ( precincts 9 and 10), and also in precincts Nos. 2, 5, 6, 7, and S. Precinct No. I cast four votes against the new proposition ; precinct No. 3. six votes, and No. 4, seven votes, making seventeen in all. The work of exchanging the new bonds began about May 3d and continued until all were paid or exchanged.

The law provided for the payment of the new bonds in thirty years, redemption to begin at the option of the county any time after ten years from date of issue. So judiciously have the financial affairs of the county been conducted, that at the lapse of thirty years the indications are that the debt will be fully paid and the last bond redeemed within a twelve month. The letter and spirit of the last agreement and the law have been fulfilled, and no stain of repudiation rests upon the old territory or its eldest county subdivision.

An unfavorable criticism may be made of the action of the pioneers of Yankton County in bonding the county for such a large sum in order to secure a railroad ; but it should be remembered that the time had then come when a railroad was absolutely necessary to the further settlement and progress of the country. The alternative that faced the people was a railroad or a stop to further increase of settlement and production. The unfriendly criticism should be upon the action of the general Government in refusing to give the pioneers of Dakota a grant of land to aid their first railroad enterprises: for up to that time aid of this kind had not been withheld from the people of the newly settled western states and territories, and the pioneers of Dakota were certainly justified in believing that the Government would favor them in like manner, inasmuch as the Government was the greater beneficiary from the building of these transportation lines through the public domain ; and it had been upon this ground that all the land grants to railroads had been made by Congress. Without a railroad it would have been practically impossible, within any reasonable time, to have settled and developed these woodless prairies, and the Government, it would seem, could not do less than donate its wild unproductive land, that cost it only twelve cents an acre, to an enterprise that made a ready market for the same land at $1.25 an acre.

There was no justifiable reason for the abrupt change in the policy of Congress from an overgenerous and often times unwise grant of the public domain, to an absolute refusal to donate an acre to Dakota for similar purposes.

CHAPTER LIII NORTHWESTERN AND MILWAUKEE CONTEST FOR CONTROL

1879-80 (Railroads-Concluded)

JOIIN I. BLAIR PURCHASES A CONTROLLING INTEREST IN THE DAKOTA SOUTHERN- PRESIDENT WICKER LEASES THE ROAD TO A RIVAL COMPANY, THE CHICAGO, MIL- WAUKEE & ST. PAUL-MR. BLAIR TAKES STEPS TO PREVENT TRANSFER OF THE PROPERTY-FINAL SETTLEMENT-MR. BLAIR SELLS TO THE MILWAUKEE, AND THE DAKOTA SOUTHERN FROM SIOUX CITY TO YANKTON AND TO SIOUX FALLS BECOMES A PART OF THE MILWAUKEE SYSTEM-MILWAUKEE RAILROAD COMPANY IN VIRTUAL CONTROL OF THE TRANSPORTATION INTERESTS OF SOUTHEASTERN DAKOTA.

Inasmuch as the Dakota Southern Railway enterprise, a weakling compared with the giants of later years, had an important bearing upon the future of railway building in Dakota, it is deemed necessary and also interesting to follow its career after it became disconnected with all legal proceedings and controversies with the County of Yankton. So far as the railway company was concerned the controversy with the county terminated when the injunction was dissolved by Judge Barnes in 1873. Thenceforward the company was a free agent, and early in its career Mr. Meckling sold his interest in the road to the Messrs. Wicker, and not long after Mr. Charles G. Wicker was the sole owner and manager of the Dakota Southern and the old Sioux City and Pembina, which had become a part of the Dakota Southern system and had been extended twenty miles above Sioux City to a point called Portlandville, Iowa, on the Iowa side of the Big Sioux. The Dakota Southern was now, as it had been since its construction, operated in connection with the Chicago and Northwestern interests centering at Sioux City. At this time the Chicago and Northwestern possessed the Dakota field and it appears might have held it had it been watchful of its interests. Mr. John I. Blair, of New Jersey, then the railway leader of the Northwest, and owner of the Chicago and Northwestern in great part, and also owner of the roadbed of the Illinois Central, now enters the Dakota field only to be beaten and baffled and out-generaled by the young giant of Milwaukee, a new comer.

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On the 24th of May, 1879, Mr. John I. Blair and C. E. Vail, of Blairstown, New Jersey ; D. C. Blair, of Belden, New Jersey; James Bain, of Scranton, Pennsylvania ; W. C. Larned, of Chicago ; C. G. Wicker and George E. Merchant, of the Dakota Southern R. R. Co., and F. C. Hills, of the Sioux City and Pacific ; N. H. Briggs, son-in-law of Mr. Wicker, and his daughter, accompanied by Miss Hunter of Sioux City, reached Yankton. Mr Blair was at this time the railroad king of the Northwest, so regarded. He practically controlled the Chicago and Northwestern, the Sioux City and Pacific, and the St. Paul and Sioux City, which comprised all the lines centering at Sioux City except the Dakota Southern and its Big Sioux branch, the Sioux City and Pembina, which had been completed to Beloit, Iowa, opposite the City of Canton, D. T.

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The purpose of this visit, as explained by Mr. Blair, was to look at the country and the railroad situation. There had already been some tentative proposition made to Mr. Blair, looking to the purchase of all or part of the Dakota Southern.

Blair said that the Illinois Central and Chicago and Northwestern roads realized the necessity of extending the feeders of their lines in Dakota, and prevent the Chicago, Milwaukee and St. Paul from monopolizing the profitable traffic of this territory, which now passes over the lines first named. Mr. Blair and his party were here as the representatives of the Illinois Central and Northwestern, whose lines were owned by him and were operated on a lease.

Messrs. Blair and Wicker, and Merchant, and the New Jersey and Pennsyl- vania gentlemen, then made an overland trip to Firesteel, up the James River valley, eighty miles away, for the purpose of viewing the country, and were gone several days. The result of this trip was the purchase by Mr. Blair of a trifle over a one-half interest in the Dakota Southern and Sioux City and Pem- bina ; and a proposition was made to the people of Yankton at a public meeting held for the purpose, to extend the Dakota Southern up the James River forth- with, provided Yankton would donate the right of way through the county, furnish depot grounds, and build a depot north of the Rhine Creek. Mr. Blair said the extension would be a great benefit to Yankton in view of the line of the Milwaukee already about constructed to Running Water which would ctit off Yankton's trade. The Pembina was to be extended from Beloit to Sioux Falls, by way of Canton, forthwith. This was the beginning of Mr Blair's connection with Dakota's railroad interests. Yankton agreed to the proposition made for the construction of the James River line and forthwith set about accom- plishing its part of the agreement. The title of the "Dakota Southern" and the "Sioux City and Pembina," was then changed to the "Sioux City and Dakota Railway Company."

During the following summer and fall Mr. Wicker came to Yankton occa- sionally, and at each visit protested that he was anxious to begin work on the James River extension, giving various reasons as the cause of the delay and among these that Yankton had not fulfilled its part of the contract. This, how- ever, was not the case, Yankton having performed all that it could do until the construction was started. Mr. Wicker's reasons for delay were not substantial reasons, and a sentiment grew up that the active and aggressive movements of the Milwaukee company in the James River valley and its Running Water line had dampened the ardor of the Dakota Southern people ; and it transpired in January following that this was a correct conclusion. It was then announced on unqties- tioned authority that Mr. Wicker had determined to sell his remaining interest. He had sold to Mr. Blair fifty-two per cent of his lines, retaining forty-eight per cent. He now announced that the Milwaukee company had made a bid for the entire property, but Mr. Blair was not willing to sell and allow the Milwaukee company to obtain control of the northwestern outlet for his Iowa lines. Mr. Wicker insisted, however, that Mr. Blair must either join in the sale, or must purchase his interest.

The issue between Mr. Blair and Mr. Wicker was stated by the latter in these words :

Mr. Blair and myself differ as to the proper policy to be pursued by our Dakota lines. I think the Milwaukee should be allowed to come to Sioux City over our road from Beloit. Mr. Blair thinks otherwise. I have therefore proposed to him to buy or sell. When 1 sold Mr. Blair an interest in the road. it was contracted that I was to remain president for three years, and the road should be under my control. Now I think it for the best interests of our company to allow the Milwaukee to compete for Sioux City freight, and if I remain at the head of the affairs of the road. this will be its policy.

Sioux City's business interests were supposed to be friendly to the Milwaukee and to Mr. Wicker's policy, for the transportation business there was under the

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control of the Northwestern, hence there was a strong anti-monopoly sentiment among the business men.

Yankton's interests, though not clearly perceived at the time, were with the Northwestern controlling the Dakota Southern, for the Milwaukee had already entered upon the construction of its branch from Rock Rapids, Iowa, to Yankton, the right of way was all procured and grading going forward.

In February, 1880, it was given out that the Dakota Southern had been compelled to refuse the use of its line to the Milwaukee. At Sioux City, the Dakota Southern and Pembina had been using the yards of the Sioux City and Pacific-Blair's road-and Mr. Blair gave orders that no cars of the Milwaukee should be given further privilege. This action rendered nugatory Wicker's efforts to accommodate the Milwaukee, now a powerful rival of the lines at Sioux City. There was no avoiding the disastrous effects of this order, which made it plain that the Milwaukee company had no rights in Sioux City which the other lines were disposed to respect ; therefore it might have been expected that rather desperate measures would have been resorted to to obtain relief. Hence the next step was one that brought matters to a focus. Mr. Wicker had not played his best card and it was now forthcoming.

On the 20th of June a number of railroad men happened to meet at Yankton. Their coming had not been publicly announced and they had apparently come from different points and by different routes, some by rail and others by demo- cratic wagon. They apparently had no common purpose, but it transpired that they assembled at the office of the Dakota Southern, at Yankton, that day or evening. The parties there present were C. G. Wicker and Geo. E. Merchant, superintendent of the Sioux City and Dakota, and S. S. Merrill, general manager of the Milwaukee, General Carey, the solicitor, and other Milwaukee officials. At this meeting a lease was constimmated which gave to the Milwaukee control of the Dakota lines of the Sioux City and Dakota, and at the conclusion of the meeting the following general orders were issued :

Office of the President of the Sioux City and Dakota Railroad Company, Yankton, D. T., March 20, 1880. To the officers, agents and employees of the Sioux City and Dakota Railroad Company :

The property of this company having been, by order of the board of directors, leased to the Chicago, Milwaukee & St. Paul R. R. Co., you are hereby notified that all orders and instructions for the running and operation of the road, will from this day be given by or through S. S. Merrill, general manager of the C. M. & St. Paul Railroad Company. CHARLES G. WICKER, President. Office of the Chicago, Milwaukee & St. Paul Railroad Company. Yankton, D. T., March 20, 1880.

NOTICE. Mr. George E. Merchant has been duly appointed superintendent of the Sioux City and Dakota Division of the C. M. & St. P. R. R., extending from Yankton to Sioux City and from Sioux City to Sioux Falls. S. S. MERRILL, General Manager.

Mr. Wicker, with the view probably of justifying himself in the minds of his Dakota friends, with whom his business and social relations had been quite intimate for a number of years, gave out the following statement :

It has been generally known for a long time that I have been anxious to dispose of my interest in the lines of the Sioux City and Dakota Company. Short lines, independent of the protection and advantages afforded by connection with trunk lines, are not profit- able, and I am $175,000 poorer than when I commenced the construction of the old Dakota Southern. Finally I sold a little more than a majority of the stock to John I. Blair, but fortunately retained control of the management. Last December I ascertained that the Milwaukee would buy the lines, and made overtures to Mr. Blair to either buy or sell so that the transfer could be made; so I could make a transfer. The Milwaukee first offered $8,750 per mile, but finally raised their bid to $9,000. Mr. Blair first agreed to sell at the latter price, but then changed his mind and refused to do so. I then insisted that if he would not sell he should buy, and Blair at last said he would give $8,750 per mile. I objected to this as we had an offer of $0.000. Thus the matter hung fire for a few days when Mr. Blair said he would take my interest rated at $2,000 per mile, and complete the trade January Ist. I wanted a memoranda to this effect, drawn up and signed, but Mr. Blair thought it so trifling a transaction, his word ought to be good for thirty days. The

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Ist of January came and Mr. Blair was not ready to close the bargain. lle sent out here his attorney, Mr. Larned, who examined the books and papers of the company, and in a lengthy written opinion decided that the articles of incorporation of the Dakota Southern, of the Sioux City & Pembina, of the consolidation of the two, and the issue of preferred stock, were full of irregularities and of no binding force. Mr. Blair then informed me that the trade was off.

I then asked Mr. Blair what he would give me for my interest, Mr. B. replied that he would give nothing- that he did not consider my interest worth anything. I then became convinced that it was Blair's intention to freeze me out, that barned's opinion was drawn to suit a purpose, and so 1 determined to save myself if I could. During this time Blair was negotiating to sell the whole thing out to the Sioux City & Pacific at $0.000 a mile. I ascertained that the Milwaukee folks were willing to take the lines, and in consulation with them and other railroad men, my course was blocked out. I had control of the board of directors, and all I wanted, to be master of the situation, was a majority of the stock. so that I could give the purchaser controlling interest. Mr. Blair had 52 per cent interest against my 48 per cent, with the Pembina branch completed to Beloit. With the extension of the line from the latter place to Sioux Falls the company was entitled to issue additional stock and bonds. \ meeting was called and this was done. The additional stock issued on the extension added to what ! already had, just over-sized Mr. Blair's interest, and this was transferred to the Milwaukee, leaving Blair in the minority, or just in the position I had been up to the time of the new issue. The board of directors then leased the Sioux City & Dakota to the Milwaukee for five years, though it is understood that practically the lease is a perpetual one, or at least may become such if the Milwaukee wills it, as the company now own a majority of the stock. On the 21st a dispatch was sent Mr. Blair informing him that the Sioux City & Dakota lines had been leased to the Milwaukee for five years for 40 per cent of their gross earnings, and that the bonds issued on the extension from Beloit to Sioux Falls had also been sold to the same company for on per cent of their par value. The same night a letter was sent him containing a draft for $198.276.47, payable to his order, and representing his entire investment in the lines, including interest to date. This indicates that there has been no intention to defraud Mr. Blair out of any money he may have put in these enterprises, but as he would neither buy nor sell, he has just been forced to take his own and step down and out.

This is probably the first time in his long and sticcessful career that Mr. Blair had been otitwitted. It was expected he would fest the legality of the transfer in the courfs. The Milwaukee company felt secure : having thoroughly examined the sitttation previotts to the transaction, under the direction of General Carey, their general solicitor and then eminent as a railroad attorney and authority.

On Saturday evening, March 27th, just a week following the Wicker Merrill meeting, John I. Blair reached Yankton, and his manner betrayed that a matter of importance burdened his mind, while his countenance and his few words expressed tinfeigned indignation. He was accompanied by Dewitt C. Blair and Walter C. Larned, all of whom were directors of the Dakota Southern Railroad Company. The object of their visit was to investigate the method by which they had been divested of their majority ownership in the Sioux City and Dakota Railroad. and that thoroughfare transferred to the Chicago, Milwaukee & St. Paul Railroad Company. Mr. Blair first learned of the transaction last named on the 22d, while in New York, from an Associated Press dispatch in a New York paper. Mr. Wicker had previously notified Mr. Blair that a meeting of the board of directors had been ordered for the purpose of arranging for the payment of taxes, but made no allusion whatever to the leasing or sale of the property. Mr. Blair claimed that the action faken was nothing less than a conspiracy to defraud him of his rights. On the same evening a meeting was held at the office of the company in Yankton, called at the request of stockholders holding a majority of the stock in the Sioux City and Dakofa company, at which meeting there were present John I. Blair, Dewitt C. Blair and Walter C. Larned, of Chicago, Illinois, all directors and stockholders of said company. At this meeting the following proceedings were had :

On motion it was unanimously resolved to adjourn to the Merchants Hotel. Yankton : and upon meeting at the Merchants Hotel. it was unanimously resolved to adjourn to the law office of Gamble Brothers, at said Yankton. On meeting pursuant to adj urnment. it was moved and thereupon resolved that S. P. Wiasner he and is hereby appointed secre- tary pro tem. On motion, I C. Blair, vice president of the company, was unanimoush

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appointed chairman of the meeting. The following preamble and resolutions were then presented and upon motion of Walter C. Larned, were unanimously adopted :

Whereas, At a meeting of four of the directors of the Sioux City & Dakota Railroad Company, held at Yankton, Dakota, on the 20th day of March, A. D. 1880, it was resolved, that the entire property, real and personal, of the Sioux City & Dakota Railroad Company, should be leased to the Chicago, Milwaukee & St. Paul Railway Company, for the term of five years at a yearly rental of 40 per cent of the gross carnings of said Sioux City & Dakota Railroad;

And. Whereas, It was at said meeting further resolved that a mortgage or trust deed should be made upon that portion of said railroad extending from Beloit to Sioux Falls, a distance of about twenty-two and one-half miles, to secure bonds to the amount of $176,000, and that said stock should immediately be sold at not less than twenty-five cents on the dollar; and

Whereas, In pursuance of such resolutions such mortgage was immediately executed and such bonds and stock issued and sold; the bonds at ninety cents on the dollar and the stock at twenty-five cents on the dollar, to the Chicago, Milwaukee & St. Paul Railway Company, or some party acting on behalf of said corporation, and the said lease was immediately executed and the possession of all the property, real and personal, of the Sioux City & Dakota Railroad Company was immediately surrendered and turned over to the said Chicago, Milwaukee & St. Paul Railroad Company; and

Whereas, That said mortgage and the said issue of said bonds and stock, and said lease have never been authorized by the stockholders of the said Sioux City & Dakota Railroad Company, nor have the said stockholders been counseled in reference to any of said acts and doings; and all of said proceedings are fraudulent and void as against said stockholders; and

Whereas, a meeting of said company has been called to meet at the office of said company at Yankton, on Saturday evening, March 27th, by request of the holders of the majority of the stock of said Sioux City & Dakota Railroad Company; and

Whereas, The directors now present at said meeting, that is to say, John I. Blair, Dewitt C. Blair, and Walter C. Larned, represent and themselves hold, a majority of the stock of said company, that is, 776 and 710, the shares out of the 1.500 shares issued by the said company at the time said meeting was held on the said March 20th, said shares having been allotted to said parties as their stock in the said Sioux City & Dakota Railroad Com- pany in exchange for 310 shares of the preferred stock of the Dakota Southern Railroad Company out of a total issue of 600 shares; and 760 shares out of a total issue of 1,500 shares of common stock of said Dakota Southern Railroad Company; and 160 shares out of a total issue of 300 shares of the Sioux City and Pembina Railroad Company, said two last named companies having been consolidated or attempted so to be, into Sioux City & Dakota Railroad Company. Now therefore, be it

Resolved, That the said lease so executed as aforesaid, is fraudulent and void, and that the said issue of bonds is fraudulent and void, and that we, directors of said company and the holders of a majority of its stock as aforesaid, do hereby rescind the said action of the said four directors and do declare the same to be unauthorized, fraudulent and void, and we do hereby declare all the acts and doings to be unauthorized, fraudulent, void, and of no effect, and we do wholly and utterly repudiate the said lease and mortgage and issue of bonds and stock, and declare the same to be of no binding force or effect upon said company.

And be it further resolved, That we, three of the directors of said company, here present and representing a majority of the stock of said company, do hereby protest against the action of the said four directors, and declare the said action to have been taken in pursuance of a fraudulent scheme on the part of said four directors, representing a small minority of said stock, to defraud the majority of the said stockholders, and to depreciate the value of their said stock, and to fraudulently dispose of, alienate and transfer the said railroad property in fraud of the rights of the majority of said stockholders.

And be it further Resolved, That we, three directors of said road and representatives of a majority of its stock as aforesaid, do protest against the action of Charles G. Wicker. the president of said railroad company, in calling said directors' meeting to be held on said March 20th, without giving any notice of the nature of the business to be transacted at said meeting. and do further protest against the action of said Charles G. Wicker, president of said company, in notifying the said three directors here present and repre- senting and holding a majority of the said stock that no action of importance was to be taken at said meeting, but on the contrary said meeting was to be merely formal, and to carry out certain formal requisitions of the laws of Dakota ; and we do declare said action to be grossly fraudulent, and a breach of trust on the part of said Charles G. Wicker.

And be it further Resolved, That the secretary pro tem of this meeting, prepare or cause to be prepared, a copy of these resolutions, and that the same be presented to one Milligan, now in possession of the books of said company, and calling himself the secre- tary thereof, accompanied by a demand that he spread the same upon the records of said company, and that a copy of these resolutions be prepared or caused to be prepared by said secretary pro tem, and served upon Mr. Van Horn, general superintendent, and Mr. S. S. Merrill, general manager, of said Chicago, Milwaukee & St. Paul Railway Company,

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History of Dakota Territory, volume I, Part 112

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920 Publication date: 1915 Publisher: Chicago, Ill. : S.J. Clarke Publishing Company Number of Pages: 1198

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920
Publication date: 1915
Publisher: Chicago, Ill. : S.J. Clarke Publishing Company
Number of Pages: 1198