Chapter IX: The Struggle for Railroads

On the 2d of June, 1858, the legislature, which had adjourned March 25, reassembled and listened to Governor Sibley’s inaugural address. He challenged investigation into the legality of his election, declaring that he would scorn to hold the position for a single hour if not legally chosen. He commended the schools and the university to the special care of the legislature, exhorting them to regard the donations of public lands to them as sacred. He advised the organization of the militia to the end that the state might protect herself from possible Indian outrages like that of Inkpaduta the year before. He warned the legislature to be careful in their action in regard to banks, which he declared to be a “necessary evil.” He deprecated the undue extension of federal interference in the affairs of the states, and, as might be expected from a friend and admirer of Mr. Douglas, pronounced in favor of squatter sovereignty in the territories. He took occasion to record his objection to frequent and trivial amendments to the state constitution, which should “ever remain beyond the reach of temporary and feverish excitement.” In no doubtful terms did the new executive give notice to the land grant railroad companies that he should hold them to a strict but reasonable conformity with their obligations. In this adjourned session the legislative bodies had no doubt about their true character as state organs. The senate had its constitutional president in the lieutenant-governor, William Holcombe, and there was a state governor to approve the acts of the houses. In the session, which lasted till August 12, a large body of statutes were enacted, many of them amendatory of territorial laws to suit new conditions. This legislature deserves praise for its diligence and appreciation of the needs of a growing state. Responding to the counsel of Governor Sibley, an elaborate militia law was passed. A provision for the organization of volunteer companies proved three years later to have been wisely planned. The cautions of the executive led the legislature to replace a banking act of many sections, passed by the same body in the previous March, by another more carefully drawn. Educational objects were not neglected. An agricultural college was established at Glencoe, a normal school at Winona, and the unlucky board of regents of the university were authorized to borrow $40,000 on twelve per cent. bonds. As if distrusting either the good faith or the ability of the four land grant railroad companies, the legislature placed on the statute book a stringent act instructing the governor how to proceed in case of default by any of them. The hopes of the people of Minnesota in this summer were centred on these land grant railroads. The panic of the previous year had impoverished many of the well-to-do, and left laborers and artisans without employment. Fortunately there was no lack of bread and meat at low prices, because they could not be got to outside markets. Money was scarce and “business” sluggish in the extreme. But there was hope. The building of the railroads would scatter large sums of money, immigrants would flow in, and the good times of ’56 would return.

The act of the Minnesota legislature of May 22, 1857, accepting the congressional land grant of March 5, provided, as anticipated by Congress, for the distribution of the lands to these four corporations:—

First, the Minnesota and Pacific Railroad Company, for building a main line from Stillwater through St. Anthony to Breckenridge and a “branch” from St. Anthony to St. Vincent.

Second, the Transit Railroad Company, to build from Winona by way of St. Peter to the Big Sioux River north of 45 degrees north latitude.

Third, the Root River and Southern Minnesota Railroad Company, for two lines; one from La Crescent to a junction with the Transit at Rochester; the other from St. Paul and St. Anthony via Minneapolis, up the Minnesota River, to Mankato and on to the mouth of the Big Sioux.

Fourth, the Minneapolis and Cedar Valley Railroad Company, for a line from Minneapolis by way of Mendota and Faribault to a point on the south line of the state, west of range 13.

The lands were to inure to the companies in installments of 120 sections, upon the completion of twenty-mile stretches of road for the running of regular trains. The constitutional amendment of April 15, 1858, had for a particular object the enabling of the companies to get each its first twenty miles built and receive its 120 sections (76,800 acres). The sale or hypothecation of this land would build an additional stretch, and so on. To make it the easier for the companies so to build, the amendment provided that when any ten-mile stretch should have been graded and made ready for ties and track, the company should receive $100,000 in the seven per cent. special Minnesota state railroad bonds authorized; and, when any ten-mile stretch so graded should be complete with rails and rolling stock, an additional like sum in bonds. Now these bonds were by no means a bonus; they were to be a “loan of credit,” according to the favorite phrase of the day. The companies on receiving them were obligated to pay the interest as it should accrue, and to redeem the principal when due. The most rigorous provisions were made in the amendment itself to secure these liquidations. The companies were required to pledge the net earnings of their several lines, to convey to the state by deed of trust the first 240 acres of land earned by construction, and to transfer to the state an amount of their own company bonds equal to that of the special state bonds delivered. These company bonds were to be secured by mortgages on all the properties and franchises of the companies. Human ingenuity, it was fancied, could exact no sounder guarantees. While the legislature was still in session in the midsummer of 1858, the companies let their contracts, and the dirt began to fly in a manner very cheering to citizens living along the surveyed lines, who boarded the hands and furnished forage, timber, and other supplies.

But there was trouble with the finances from the start. On August 4 Governor Sibley gave warning (why should it have been needed?) to the companies that he should hold them to a strict compliance with the obligations they had assumed. In particular he demanded that when they came to exchange their company bonds for the special state bonds they must secure to the state a prior lien on their properties and franchises. The companies balked at this, and by their attorneys applied to the supreme court of the state for a mandamus requiring the governor to issue them bonds without such priority. To obtain a construction of the law Governor Sibley waived objection to being governed by the court in a matter within his own official discretion. The mandamus issued. The text of the amendment of April 15 showed no requirement of priority, and the legislative journals show that efforts to inject such requirement had been vain. The state railroad bonds, issued to the companies as they severally completed their ten-mile stretches of grading, when placed upon the market did not go off like hot cakes. In form they were bonds of Minnesota acknowledging to owe and promising to pay dollars, signed, countersigned, and sealed like other bonds. The faith and credit of the state were pledged in the constitutional amendment to the payment of the interest and redemption of the principal. But the people understood that all this was mere form; the railroad companies, not the state, were to pay. The newspapers industriously circulated this idea. Sixty-seven members of the legislature who had voted for the issue of the bonds signed a published declaration that none of them would ever vote for a tax to pay them. When offered in the New York market they were not wanted, unless by speculative operators at a figure warranting risk. Governor Sibley’s personal representations in Wall Street did not increase confidence. He attributed his failure to factious interference of citizens and Republican newspapers.

Construction was resumed with the season of 1859 by contractors willing and able to take bonds in pay, but by midsummer this plan ceased to work. One firm in July was obliged to put up $30,000 to raise $8000 in cash. Railroad building ceased, and Minnesota sat in ashes. The surprise and exasperation of the people can easily be imagined. The companies had not followed the course expected of them to complete and put in operation successive ten-mile stretches, but preferred to push the grading for many such stretches and postpone track-laying and other work of completion. This aroused a suspicion that they did not intend to complete any sections, but to secure their $10,000 per mile, a sum far in excess of the actual cost, and quit. This suspicion was intensified by rumors that the grading had been confined to discontinuous earthwork alone, on the level prairie where it could be cheaply done. These rumors had but slight foundation, but they were accepted as true and to this day there are those who believe them. When the legislature of 1860 met (there was no session in 1859), Governor Sibley in his retiring message informed that body that the four companies had graded 239.36 miles, and had received 2275 one thousand-dollar special state bonds in exchange for an equal amount of company bonds.

The legislature of 1858 has enough to answer for in proposing to the people the consummate folly of offering to sell bonds which they never meant to pay. Of the final act of their session (August 12) it cannot be charitably recorded that it was one of mere folly. As the end of their labors drew nigh in the dog days, it became known that there would be a residue of some $10,000 of money appropriated by Congress for territorial expenses. It seemed a pity not to keep that money in Minnesota. After a variety of proposals consuming much time had failed to receive concurrence, the two houses agreed to a compromise by which $6000 was appropriated for stationery and $3500 for postage, the members to share equally. Governor Sibley was obliged to give his official sanction to this division, because it was impossible in the last hour of the session to veto the general appropriation bill in which these items had place, but he took occasion to say that he gave a most reluctant consent to the grab.

The banking act passed by the legislature of 1858, on July 26, provided for the issue of circulating notes secured by deposits of public stocks of the United States, or of any state, up to ninety per cent. of the average value of such stock for six months in the New York market. On one of the last days of the session an amending act was passed injecting into the proper section of the bank act the words “or the State of Minnesota at their current value.” The intended operation of the clause was that bank-notes might be issued on the security of the special railroad bonds. To obtain a favorable rating by the state auditor a clique of operators traded among themselves in the bonds, in New York city, until they felt warranted in submitting affidavits that their value as ascertained in that market was ninety-five cents on the dollar. The auditor of the state thereupon issued some $600,000 in notes to fifteen banks depositing the special railroad bonds. On January 1, 1861, he was obliged to report that seven of them had failed, and that he had sold their bonds. In one case he got seventy cents; in six others, prices ranging from thirty-five cents down to sixteen and a quarter cents.

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The Sioux chiefs were so much excited with the money elements of their treaties of 1851 that they probably did not know what they were about when, in the summer of 1852, they assented to that amendment proposed by the Senate canceling the reservation of homes for the tribes on the upper Minnesota and authorizing the President to remove them from the ceded territory. It was, however, deemed best to move the people on to the designated areas, and they were so moved in the season of 1853. It soon came to their knowledge that they were only temporarily encamped there, and must presently move on to some unknown country. Their sorrow and exasperation were intense, and did not abate until they were assured in the following summer that the Great Father, as authorized by Congress, would permit them to remain where they were. They did remain in the sense of maintaining their principal villages on the reserve, but they constantly wandered in bands either toward their old homes or out on the prairies to the west, where buffalo still fed in countless herds. Their agents were much occupied in recalling these vagrants and in chasing the white whiskey sellers who infested the boundaries of the reserve. In 1857 Joseph R. Brown, that notable character whose career intersects the line of our narrative at many points, was appointed Sioux agent. As he was the father of many children born of his Sisseton wife, and had lived and traded among the Sioux for many years, he possessed an influence and a knowledge of Indian character equaled by few. He had no belief that the Indian could be transformed by religion or education in the twinkling of an eye into a fully civilized man, but he knew that he could be induced to take on the beginnings of civilization. His simple plan was to get the savages to live in houses, adopt white man’s dress, and do a little planting. In two years he had two hundred men, mostly heads of families, located on eighty-acre farms. They had disused the blanket, put on white man’s clothes, and, most notable of all, had had their hair cut short. His “farmer Indians” numbered seven hundred. This was not a large proportion of the seven thousand “annuity Sioux,” but the northern superintendent of Indian affairs prophesied that in three years the “farmer Indians” would outnumber the “blanket Indians.” The farmers, he reported, had given up their feasts and dances and were living as a “law-abiding, quiet, and sober people.” In this reform Agent Brown was assisted by the missionaries, under the leadership of Drs. Williamson and Riggs, who had followed the Sioux to their reservations. The former had organized a society of ambitious young Sioux, under the title of the “Hazlewood republic,” the object of which was to encourage respect for law and to teach the art of government. On the accession of the Republicans to power at the seat of government in 1861, Agent Brown’s place was needed to reward a laborer in the Republican vineyard, utterly inexperienced in the duties. It is perfectly safe to say that had Brown been left alone there would have been no “Sioux outbreak.” When the treaties of cession were negotiated in 1851, the proposed reservations seemed very far away and very ample. The Sioux had hardly got settled before the white man appeared with his whiskey jug and began taking up preëmptions on the neighboring lands. It did not take these adventurers long to discover that the Indians had more land than they needed. Moved by their representations the Minnesota legislature of 1858 adopted a joint resolution instructing her delegation in Congress to secure the reduction of the reservation and the opening of the excluded areas to settlement. In the summer of that year delegations of chiefs of the upper and lower tribes were taken to Washington, where they were induced to consent, in separate treaties, to the sale to the government of all their lands (some eight hundred thousand acres) on the left (northeast) side of the Minnesota River.

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At the close of the state campaign of 1859 Alexander Ramsey came to his own. He was elected governor by a majority which no one could question. At the same time the office of lieutenant-governor fell to Ignatius Donnelly, who for forty years was to be a conspicuous figure in Minnesota politics. This young gentleman had come to Minnesota from his home in Philadelphia in 1856, at the age of twenty-four. He had won no little applause in his native city by some public addresses, a volume of juvenile poems not without promise, and a number of published essays. Breaking out of the Democratic fold along with very many young men of the day, he threw himself heart and soul into the Republican cause. There was no man of his time, certainly not in Minnesota, who could more completely enchain an audience of citizens than Ignatius Donnelly. A speech in the Republican convention of 1859 won him an unexpected nomination, and his election followed. The inaugural message of Governor Ramsey to the Republican legislature which came in with him is a notable document. The persistence of hard times moved him to cut his own salary from $2500 to $1500 and to recommend corresponding reductions in those of state officials. By these and other retrenchments adopted by the legislature, the expenses of the state government were reduced by 49.3 per cent. Reminding the houses of the fact that the general government had already bestowed twelve millions of acres of public land and more (an area equal to that of Holland or Belgium), he exhorted them to the greatest diligence and fidelity in execution of their trust. In particular he urged that the school lands be safeguarded against premature sale, and that all purchase-money coming in from these should be paid into the state treasury to form a perpetual endowment. While his particular scheme was not adopted in detail, his principle was. A surviving contemporary opposed to him in politics has declared that had not Governor Ramsey stood like a rock against multifarious schemes for dissipating the school lands, Minnesota would not have a dollar of school fund to-day. That fund now amounts to nearly $20,000,000 and will be greatly increased in the future. For this great service the name of Alexander Ramsey should be remembered in Minnesota as long as the state survives.

The incoming legislature had for its most exciting duty that of electing a United States senator in the room of General James Shields, who had two years before drawn the short term. The choice fell on Morton S. Wilkinson of Stillwater, the pioneer attorney of that place. He had coöperated in organizing Republicanism in the territory and had attracted the attention of leaders outside, among them Seward and Lincoln.

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This election disposed of, the houses addressed themselves to railroad matters. The state had turned out $2,275,000 of her “special” bonds, and had for them not a mile of railroad, but only some two hundred and forty miles of rather slovenly graded road-bed. Governor Ramsey, with the strong common sense which never failed him, urged the legislature to settle the business at once. Though he had a favorite plan, his concern was not for his own plan, but for any kind of a settlement. He warned the legislature that if the vexed question were not settled it would confuse politics and invite corruption. The bonds would be bought up for a song by speculators who would subsidize newspapers, shout repudiation, and pound on the doors of the legislature till that body would be forced by their sheer importunity to satisfy them. But that legislature had come from an exasperated people who believed in their hearts that the railroad companies, and politicians in league with them, had deceived and cheated them. They had never promised, in fact, to pay those bonds, and the takers of them knew that, and were estopped from demanding redemption out of the pockets of the people. The houses appointed a joint committee of sixteen on railroad grants and bonds. Six different reports came in from detachments of this committee. One member, Senator Mackubin of St. Paul, alone proposed the full payment of the bonds. The legislative bodies were as much divided as were their committeemen. All they could agree to after days of discussion was to hang the whole proceeding up by means of two constitutional amendments to be submitted to the electors. One of these was to expunge from the state constitution the amendment of April 15, 1858, authorizing the “five million loan”; the other, providing for a referendum to the electors of any law for paying off the outstanding special railroad bonds. The vote on the expunging amendment, on November 6, 1860, was: Yes, 19,308; no, 710. The vote on the other amendment differed but little. The ostrich had buried his head and eyes in the sand.

The land grant companies having completely defaulted in all their engagements, there remained for the governor to proceed as required by law to recover to the state the public lands conditionally made over to them. Foreclosure proceedings culminated in the sale to the state of all the franchises, rights of way, property, and privileges of each company for the sum of one thousand dollars. As the electors had by a constitutional amendment declared that the special railroad bonds were no obligations of the state, she was apparently the gainer by the rights of way and the grading done by the companies, but in fact the state was never more than a trustee of the lands. The loss of their properties did not, of course, work a dissolution of the railroad charters, and the companies, or their ghosts, still existed. When the legislature of 1861 was in session they had sufficient influence to persuade that body to give them another lease of life. They had gone down in the common ruin after brave efforts to execute their contracts. By separate acts passed March 4, the state released and restored to the four companies severally all their forfeited properties and assets, free from all claims and liens by the state,—this on certain conditions which did not seem hard. Each company was obligated to deposit a guarantee fund of ten thousand dollars, to begin building immediately, and to have ten miles of road in full operation by the end of the calendar year, and certain stipulated mileages in years following. In these Kalends of March there was no expectation that before the grass should be green on the Minnesota prairies a war cloud would have settled over them. It was no time to build railroads on borrowed money. One of the companies, the Minnesota and Pacific (germ of the Great Northern Railway), made its cash deposit and began work. Late in the season it ran the single locomotive, the William Crooks, which it had purchased, over the fourteen hundred feet of track laid from the St. Paul levee to a storage shed. Its ten thousand dollars were forfeit. All the companies having defaulted, the lands, rights of way, and properties reverted to the state.

The desire of the people for railroads did not and could not abate, and there were still adventurous persons willing to risk money for the great prizes lying in the land grants. In the winter of 1862 four new companies were organized, and to them the legislature turned over the grants and rights of way on liberal conditions. The St. Paul and Pacific Company succeeding to the Minnesota and Pacific, built from St. Paul to St. Anthony, and on October 14 advertised for regular business. In 1863 two companies built forty-six and one half miles, and in 1864 three built forty-three and one half miles. Meantime the special railroad bonds remained in the limbo to which the constitutional amendments of 1860 had relegated them.

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Other acts of the legislature of 1860 of less importance, but still notable, were: One changing the existing system of county government by boards of supervisors, elected from the towns, to one of county commissioners, to be elected from districts; another providing for the registration of voters in all precincts; a third replacing the elective board of twelve regents created by territorial law with one of eight, five to be appointed by the governor and three _ex officiis_. The new board succeeded to a melancholy task.

The people of Minnesota had moderated their expectations of an abounding population, but they were still greatly disappointed when the census of 1860 footed up but 172,023 inhabitants, including 2369 Indians. The native born were 113,295, the foreign born 58,278. The great Scandinavian influx had hardly begun. Of the whole number of persons engaged in gainful occupations, 53,426, the farmers were 27,921, dwelling mostly in the river counties and those immediately in the rear. With her population so widely spread out on the land and that in its virgin fertility, Minnesota was not really poor, in spite of business stagnation, of a high interest rate (two per cent. a month), and of isolation from outside markets for half the year. This isolation was, however, mitigated by the completion of a line of telegraph to the cities at the head of navigation, so that “through” dispatches were regularly received in October, 1862. The office in St. Anthony was closed after a few months, and the business men of Minneapolis were obliged to subsidize that of their city.

The conflict in national politics in 1860 was a hot and lively one, not merely between the two great parties, but within the separate ranks. The Democrats had not been so long out of power as to despair of a return. The Republicans had just begun to taste the sweets of office and its emoluments, and were fierce for more. The aspirants were inconveniently numerous and eager. In the caucuses and conventions they competed with almost brutal ardor for nominations, equivalent, in their happy anticipations, to elections. No sooner had the October elections resulted in a Republican triumph than aspirants for federal employment began weaving the combinations which should capture the Minnesota appointments. The friends of Governor Ramsey formed into one camp; the “land office clique” into another. The latter gained a temporary advantage, but did not succeed in their ultimate purpose of placing one of their number in the United States Senate when the next vacancy occurred. They also failed to get Governor Ramsey, his own logical successor, out of the way by a promotion to the headship of the Interior Department.

The Minnesota Democracy had been steadfast adherents to Senator Douglas, who had earned their support. The delegation to the Charleston convention of 1860, though not instructed, was presumed to be solid for the Illinois statesman. When Senator Rice and another separated and stood by Breckinridge, there were accusations of treason, bribery, and all the crimes in the political calendar. It ought to have been foreseen that Mr. Rice by temperament and interest would be attached to the conservative wing of the Democracy.

As the time for the state election of 1861 drew on, it was so apparent that Messrs. Ramsey and Donnelly would succeed themselves as governor and lieutenant-governor that only the slightest activity was manifested in the campaign. The total vote for governor on October 8 was 8048, of which Ramsey received 6997.