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


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
lavishly after the manner of railroads
in boom times. All construction was
| Unfortunately expensive. In 1872 Jay
Cooke & Co. informed the board of
directors that the company was al
ready in financial straits, and 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 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.
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,OO00 900 of the outstanding 7-30
bonds with new preferred stock of
which $51, 100000 was to be issued, and
also an issue of 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 s 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
10000 900 acres of land. The cost of
this reorganization was tl.if1ing, and
the bankruptcy proceedings were car
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-
dency, Charles b. Wright of Philadel@
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 its 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 $780, 600 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 a 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 a mortgage on the
Missouri division, from the Missouri
river to Glendige on; 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 dOreille bonds. This
loan amounted to 1850, 900. Instead of
beginning the construction at Portland,
the chief city of the northwest, seri-
Gus mistake was made by commencing
it 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 dis1ointed route for its Portland
connections and to employ it's resources
in building it's main line from Wallula
to Spokane Falls and farther east to
Lake Pend d'Oreille in Northern Idaho.
President Billings enlisted the friend
ship 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,
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
hackers of the Northern Pacific COM