Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-10-02
HILLS GREAT BARGAIN
Purchase of Iron Lands for the
Great Northern.
LEASED TO STEEL TRUST
Royalties Expected to Reach $40, O00,-
600 Annually.
REJECTED BY ROCKEFELLER
D. M. Philbin Tells the Story Of the
Transaction-one of the Most
Profitable Contracts Ever Made.
REJECTED BY ROCKEFELLER
BY WILLIAM F. CURTIS.
Special Correspondence Of The Star and the Chicago
Record Herald.

| BY WILLIAM f. CURTIS.
| Special Correspondence Of The Star and the Chicago
| Record Herald.
| HIBBING, Mimi, September -. 1907.
| One of the largest business transact
| lions that ever occurred between human
| beings, and one of the most profitable
| contracts that were ever made in the
history of mankind was when JImes j.
! Hill leased $4,000 acres of the iron ore
| lands belonging to the Great Northern
| railroad to the United States Steel Com
| pany. Mr.. Hill bought these lands for
| about $5,OOO,OOO. He sold the mineral
| rights for a royalty on all the ore that is
| taken out, starting at IS cents Il ton and
| advancing each year at the rate of 2h
| cents ton. until it finally reaches 81 a
ton after ten years The lowest estimate
| of the ore in the property covered by this
lease Is five hundred million tons, and
some experts have put the total as high
as thousand million tons. The royalties
upon the products of these mines which
are part of the present and future in
come of the stockholders of the Great
Northern railway. Will, therefore, amount
to not less than five hundred millions of
dollars, and may reach is high as a thou
sand millions without the slightest cost
or risk. All the stockholders have to do
Is to stand still and take the money.
The royalties are now about one mil
lion dollars year and they will continue
to Increase until they will probably reach
installments Of from seven to ten million
dollars a year. And all this from an
original investment that did not exceed
five million dollars
In addition to this royalty the Great
Northern railway Will receive a revenue
of so cents a ton for the transportati OF
all this ore, which. If the output is five
hundred million tons. the minimum esti-
mate, will amount to four hundred mil
n a. To fhA
royalty
The ore is there. and 1t must be mined
and hauled away. The Great Northern
railway has q contract to haul it, 1t also
has contract for A royalty Of a dollar a
ton, more or less, for the mining rights,
and nothing can prevent the realization
of these contracts unless the world comes
to an end.
For the Railways Benefit.
I have never seen any allusion to this
transaction in the muck-rakers' magazines
or in any of the numerous publications con-
corning the conduct of corporations or rail-
way kings Mr.. James J. Hill has had his
share Of newspaper criticism and abuse
and II he had stolen mine from the Great
Northern railway, volumes would have been
printed about it. Mr.. Kellogg, who is con-
Quoting the prosecution Of the Standard
on Company for the administration, drew
all the papers in the case and acted as
Mr.. Hills legal adviser, so that he is per-
haps more familiar tan any other man
with the facts. and If any muck-raker will
take the trouble to question Mr.. Kellogg
he can learn the particulars Of this extra
ordinary transaction:
l. That Mr.. Hill purchased the lands in
his own name, with his own money and as
sumed all the risk.
. That he carried them in his own name
and at his own risk until it was demon
strated that the investment was safe and
would be profitable, and
g. When the enormous yalue Of the
chase was demonstrated, he conveyed the
entire property and the prospective profits
to the stockholders of the Great Northern
railway.
Such transactions should not be ignored,
particularly at this time, when the. selfish
ness and dishonesty of railway manage
ment are made SO much of
The most remarkable feature of this ex-
traordinary transaction is that James j.
HILL the party of the first part, might have
made it a personal matter. All of this
present and prospective wealth might have
been his; 1t might have been kept for him
self and his family If he had desired to
have it that way, but If he ever had such
a temptation nobody suspected it. He or
dered the deeds to the land made out In
favor Of the Great Northern Railway
Company.
The Man on the Box" in this gigantic
transaction Mr.. d. NJ. Philbin now
general superintendent of the ore roads,
docks and all the mining interests of the
Great Northern railway in this part of
L
with him for the last few days, and taking
him unawares the other night, l got him to
tell me the story.
Mr.. Philbin's Narrative.
That part Of the Great Northern railway
formerly known the Duluth and Winni-
peg was originally started with the inten-
ton of building track direct through Min
nesota and the Red River valley to Winni-
peg said Mr.. Philbin. 1T was completed
as far as Deer River in 1892 when 1t was
stopped because the government would not
give 1t right of way through the White
Earth Indian reservation. About this time
the Merritt brothers. associated to some ex-
tent with Henry w. Oliver of Pittsburs
and aided in a financial way by John D.
Rockefeller, were building the Duluth Mis-
sabe and Northern railway to carry the ore
from the mines they were then opening on
the Mesaba range to Lake Superior The
first ore shipped a lot of 1000 tons from
the Mountain Iron mine-located seventy
six miles north of Duluth-in the fall of
1882. During the winter and spring of 1899
the Merritts completed their road to Du-
luth and built their own docks. During the
summer of 1893 they shipped about 100 600
tons. In the meantime the Wright & Da-
Wis Lumber Company of Saginaw had given
an option on 1900 acres of land from which
1t had cleared the pine timber to party
OF Youngstown. Ohio, people, who proceeded
to explore it. and while sinking drill holes
and digging test pits uncovered what ia
now known as the Mahoning mine The
ore from this mine shipped over a
| logging road which had been buiIt nv the
Wright & Davis Lumber Company from a
point called Swan River. thirty miles south
of the mine. and thence Via the Duluth and
| Winnipeg to their ore docks on Lake Su-
peror.
| In 1897 the Great Northern Railway