The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-09-05

its bonds under the sale of them by Jay
Cooke & Co. In less than three years
| S30,000,000 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. 1T 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 all 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-
ton 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 pra1-
ries of North Dakota, as far as the Mis-
! souri, river and halted at the new
| town Of Bismarck. Money was spent
! laV1Shly after the manner OF railroads
in boom times. All construction was
Unfortunately expensive. In lSfz Jay
| Cooke q 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 &C
ton of Charles B. Wright, of Phlladel-
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.
INACTIVITY AND PRACTICAL IN
SOLVENCY.
The failure of Jay Cooke & Co. was
! followed by another period of inactiv-
| 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
| Tor to Bismarck, distance OF about
$50 miles. There was little popula-
| ton along it to support it. 1t 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 Bill
lings, of Vermont, came to the rescue,
| with 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,O00,000 Of the outstanding 7-30
bonds with new preferred stock, of
which $51 100000 was to be issued, and
also an issue of $40 100000 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 per cent per an
mum. AS there was five years of I'M
paid interest due the holders of the old
| bonds, it took $42, 100000 of the new
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 SIS miles
! of road free from incumbrance, and of
| 100000 acres of land. The cost of
this reorganization was trifing, and
| Tile proceedings were Cal
| ried forward so rapidly in the courts
and with sagacity and harmony that
the horde of wreckers and plunderers
| who usually pounce upon the fallen cor
/ porationS was completely baftied.
CONSTRUCTION RECOMMENDED
In 1874, when Gen Cass, who had done
much to promote the settlement of the
/ Red river Valley resigned the presi-
| H.
phia, was elected to the place. He had
| been a merchant and 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
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 it's feet again. He succeeded in
close of 1876, Mr.. Wright was able to
making the road pay expenses. The
| trains ran only to Fargo for two WIN
| ters, and during the third winter the
terminus was at jamestown. At the
show the directors that the road had
not only paid its way, but had left a
surplus of 100000. The value of the
| great Northwestern prairies for wheat
growing was now fully established, and
| 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 short link of road in
| North Minnesota from Sank Rapids to
Brainerd. By 1878 the general business
condition of the country had so far i'm
proved that it was determined to make
| an effort to raise money for continuing
the construction of the main line of the
Northern Pacific westward from Bis
marck. This was 5done by issuing
bonds secured by s'mortgage on the
| Missouri division, from the Missouri
river to GlendiEe OF; the Yellowstone
The Missouri loan was speedily taken
! in 1879. and the 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 Pend d'OreiIle bonds This
loan amounted to $4500,000. Instead of
beginning the construction at Portland,
the chief city of the northwest, a seri-
| Gus mistake was made by commencing
/ if at the junction of the Snake and Co
Iumbia rivers, where the town of Pasco
now stands From this point to Port
! land a route of travel had been opened
by steamboats, and by short portage
| railroads around two rapids in the
river. The company determined to use
this disjointed route for its Portland
connections and to employ it's resources
in building its main line from Wallula
to Spokane Falls and farther east to
Lake Pend d'Oreille in Northern Idaho.
President Billings enlisted the friend
shin of Winslow, Lanier &, Co., of New
/ York. for the Northern Pacific This
! firm associated with itself in the sale
of the new bonds the house OF Drexel,