CHAPTER XII.

Previous

Visit in Minnesota and Philadelphia—Conversation with Jay Cooke—The Crisis of 1873—Negotiations in Holland—Draining of a Lake in SkÅne—Icelandic Colony in Manitoba—Return to America.

In the spring of 1873 I returned to Minnesota in company with a large number of immigrants. Being anxious to have my children learn the Swedish language, I left my family in Sweden where the children attended school. They spent this summer at Ronneby watering place, where the surroundings are characteristic of the mild and pleasant scenery of southern Sweden.

In traveling from the Atlantic to Minnesota we came by way of the Great Lakes and the Sault St. Marie canal. Having spent a couple of months in Minnesota I returned to Europe again via Philadelphia, New York and Quebec. The reader may remember that the Northern Pacific railroad was building at that time, and that Jay Cooke, by means of his enthusiasm and great popularity, had succeeded in raising large sums of money for this stupendous enterprise. The Union Pacific railroad, south of us, was already in operation, and its owners, fearing the competition of the new road, had resorted to all conceivable schemes to undermine the confidence of the public in the Northern Pacific road and its promoters. Many of those who had furnished money began to feel uneasy, but Jay Cooke went ahead, full of hope and confidence in its final success. Just as I called at his private office in Philadelphia in August, one of his bookkeepers handed him a card from a prominent moneyed man in Philadelphia who wished to see him, and the following conversation took place between the two:

“What can I do for you, my friend?” Jay Cooke said.

“We begin,” said the capitalist, “to lose confidence in your railroad schemes. I have bought $20,000 worth of bonds, but I am getting a little afraid, and came to ask your advice.”

“My dear sir, the Northern Pacific Railroad bonds are just as safe as United States bonds.”

“If this is your conviction, will you please exchange them for my bonds?”

“Certainly. Here; give this”—he handed him a slip of paper with a few lines on it—“to my cashier, and he will give you United States bonds in exchange.”

The gentleman withdrew perfectly satisfied, and Jay Cooke turned to me with the following explanation: “I have seen the Northern Pacific country; that’s the reason I am so confident in the success of this railroad enterprise. If we only succeed in accomplishing the work, I shall certainly prove that I was right; but if we fail, our antagonists will get a grist to their mill. But, whatever the result may be, no one shall have a right to say that I did not stake my fortune on my conviction.”

The same day I left Philadelphia for Europe, but I had scarcely reached Sweden when the great crisis came. Jay Cooke, whose fortune was estimated at twenty million dollars, was a ruined man. The work on the Northern Pacific railroad was suddenly stopped, and the obligations of the company depreciated to almost nothing. We all remember the terrible crisis that followed. Thousands of people were ruined, and the whole country suffered one of the most disastrous financial crises of modern times. My own loss was a very hard blow to me, not merely because I lost my position, but because my property in Minnesota, which consisted exclusively of real estate, stock and farm products, lost its value. This catastrophe was chiefly due to business jealousy, and there was no real cause for the panic, which was also clearly proven afterward. The Northern Pacific railroad has now been completed, and has proven to possess all the merits which Jay Cooke claimed for it. Its obligations are again above par. Jay Cooke has paid every dollar of his debt, with interest, and again lives in affluence and luxury, respected and honored by the whole country.

Returning to Sweden I passed through Holland, which country I had visited a couple of times before, as already mentioned. I carried important business letters from the leading men of the St. Paul & Pacific Railroad Company, now known as the Great Northern Railroad Company. Dutch capitalists had advanced the money—about twenty million dollars—for building this road. The company had received very extensive land grants from the United States government; but during the first few years after the construction of the road to Breckenridge the country through which it passed was so sparsely settled that the traffic of the road was insufficient to pay its running expenses, hence their stocks and obligations depreciated very much in value. But the American railroad officials with whom I had been connected in the capacity of land agent were firmly convinced that if this road could be extended about thirty miles to the Northern Pacific railroad, and a little more time allowed for the settlement of the country along the line, the enterprise would pay a handsome dividend. It was my task to explain this to the Dutch capitalists, and persuade them to advance another $150,000—a mere trifle compared with what they had invested already—to build said extension, which was to pass through a perfectly level country. The president of the company, George L. Becker, and its land commissioner, Herman E. Trott, had previously visited Holland on the same business. But all our representations were in vain. The Dutch were stubborn, and would not give out another dollar. “It is of no use,” they said, “to throw away a small sum of good money after a large sum of bad money, for it is all lost, anyway.” The crisis of 1873 aggravated the situation still more, for this company, and its bonds were continually depreciating. The St. Paul & Pacific railroad had pledged itself to accept its own bonds at par in payment for its land, and as I and others had sold hundreds of thousands of acres of this land to new settlers on credit, I tried, and also succeeded, in perfecting an arrangement with the Hollanders, by which the new settlers who had purchased land on credit, were allowed to buy on time the bonds of the company, at about twenty-five per cent. of their face value, and apply the same, without discount, on their debts for the land, a method of liquidation that was highly advantageous to the settlers. As soon as this was found out in Minnesota, bankers and other capitalists sent agents to Holland to make similar arrangements, and, in the course of the next three years, a brisk business was done in exchanging those bonds for land, by which thousands of settlers saved large sums of money, and a number of bankers and agents made small fortunes. If I had returned to Minnesota immediately I could have realized a very handsome profit by this arrangement; but I had made agreements which compelled me to stay in Sweden some length of time, and I left this business in the hands of my former partner, Consul Sahlgaard, and the St. Paul Savings Bank. But they did not grasp the importance of this matter until it was too late, and the lion’s share of the profits went to new parties; who thus reaped the benefit of my plans, as is often the case under such circumstances.

As in the case of the Northern Pacific Railroad, the subsequent success of the St. Paul & Pacific Railroad proved that Messrs. Becker, Trott, and myself were right, and if the Dutch bondholders had followed our advice they would not only have saved their twenty million dollars, but also made as much more. The bonds continued to depreciate to almost nothing until the company was declared insolvent, a receiver appointed, and very expensive legal measures were resorted to, until finally the Dutch became disgusted with the whole matter and transferred all their interests to an American syndicate headed by J. J. Hill, of St. Paul, at present the well-known Minnesota railroad king. The sum paid was a mere trifle. Hill’s syndicate procured money for building the connecting link and completing the system. The syndicate made twenty million dollars by this transaction, and, within five years after the Dutch had sold their bonds for a mere bagatelle and the company had changed its name to the St. Paul, Minneapolis & Manitoba, practically the same bonds were sold on the exchange in Amsterdam for one hundred and fifty cents on the dollar.

The only profit I derived from my connection with this business was that I gained the respect and confidence of the Dutch capitalists, who very soon understood that they would have been all right if they had followed my advice. Therefore, when another Dutch company, known as the Minnesota Land Company, shortly afterward was brought to the verge of ruin by mismanagement, the affairs of this company were intrusted to my hands, and when the Maxwell Land Grant Company of New Mexico, which also consisted of Dutch capitalists, got into similar trouble they appointed me American manager of the affairs of that company, to which I shall refer further on.

Soon after my return to Sweden in the fall of 1873 I became interested in an important business enterprise near my old home. A few years before this a number of Englishmen had organized a stock company for the purpose of draining a big swamp, and a lake called HammarsjÖ, in the vicinity of Christianstad. After expending a large sum of money the company failed to accomplish the undertaking. An officer in the Danish army, Captain M. Rovsing, who had had experience in that kind of work, in company with myself bought all the privileges and rights as well as the plant and material of the English company, and the work was completed under the supervision of Captain Rovsing in the latter part of 1875. This Captain Rovsing was not only a firstclass engineer, but also an able and good man in other respects. I cannot tell whether it is luck or something else, but it is certain that I have always had the good fortune to enter into close business connections, and to form ties of intimate friendship, with persons distinguished by the highest sense of honor and integrity, and of those acquaintances Captain Rovsing occupies one of the foremost places.

During a part of this time I also contributed some time and work toward colonizing the province of Manitoba, and thereby gave an impetus to the establishment of the first Icelandic colony in the Northwest.

In the spring of 1874 we moved to Gothenburg, where we stayed until the work at HammersjÖ was completed, and in January, 1876, we said good-bye to Sweden, and arrived in America after a stormy voyage of nineteen days across the Atlantic. For sixteen days the storm was so violent that the life-boats and everything which was loose on the deck was swept away by the waves, and the officers serving during the night had to lash themselves to the rigging by ropes, not daring to rely on their hands and feet.

It is strange how easily people in the course of time get used even to the most unpleasant circumstances. This was illustrated in a striking manner by the few cabin passengers who sat packed together in the cabin during this storm. After a couple of weeks we got so used to it that we finally found our voyage quite endurable. Still we were very glad when the beautiful steamer Circassian of the Allan Line brought us safely to shore in Portland, Me. A few days more on rail, and we were again safe and sound in our dear Minnesota.

                                                                                                                                                                                                                                                                                                           

Clyx.com


Top of Page
Top of Page