Visit in Minnesota and Philadelphia--Conversation with Jay Cooke--The
Crisis of 1873--Negotiations in Holland--Draining of a Lake in
Skane--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 Hammarsjoe, 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 Hammersjoe 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.