Friday, April 27, 2018

The Litchfield Brothers - "...Minnesota beckoned them in 1862"

Electus Backus Litchield
"Flagrantly & monumentally impudent"
How did the St. Vincent Extension (which was the rail line between east St. Cloud and St. Vincent) get made?  Well, it so happens that St. Vincent had its own version of "Hell on Wheels"... 

In the course of his various "business enterprises", E.B. Litchfield is said to have bought many an elected official. Except for one: Populist Congressman Ignatius Donnelly of Minnesota. While Donnelly worked for all the railroads in Minnesota at one time or another, he refused to continue working for E.B. Litchfield and the First Division St.P&P RR.

While lobbying Congress to expand the St.P&P RR land grant to 10 sections (square miles) per mile of track built, E.B. needed the help of members of Congress. Railroads would sometimes hire sitting members of Congress (and other elected officials) to serve as their "legal counsel".

In 1868, Donnelly wrote to E.B. regarding his $1,000 "retainer" and position as legal counsel to the First Division: "The matter has given me no little uneasiness of conscience. I have been laboring under the fear and dread I might instinctively be willing to do more for your company as attorney than I would if I did not hold that relation to it." Donnelly even offered to return the $1,000 or perform some actual legal services for the money.

Electus was just one of five Litchfield brothers, all involved in one way or another with the railroad business.  Their main involvement: Investment.

Edwin Clark Litchfield was put in charge of the First Division.  He agreed to finance the branch line from St. Paul to St. Cloud.  To the Associates1, he was a greatly vexed investor, "a wary old bird".  The Associates had trusted allies in Horace Thompson and Edmund Rice, who promised to "leave no stone unturned to bring about a reconciliation" between the contending parties.  If they failed, the Associates had contingency plans "to handle, with or without gloves on," Litchfield, Becker, Farley, and anyone else who got in the way.  They had not come this far only to lose the much-coveted land grant from St. Paul to the Canadian Border.

Source:  Google Books
A second act, one of the many "special acts" of the Minnesota legislature appropriating funds to further build out the railway lines, provided for another land-grant line - an extension branch from St. Cloud to Minnesota's northern border at the town of St. Vincent.

1867 was the year the British North America Act granted Canadians their political independence.  "Knowing that newly independent Canadians would soon embark on their own transcontinental railroad schemes, SP&P directors held a special stockholders meeting to map out ways to pull northern wheat-growing riches down a proposed Canadian Pacific Railroad (CPR) branch line from Winnipeg to the international border, through St. Vincent, and then down into St. Paul.  On the strength of this scheme, the state legislature gladly renegotiated the land grants, rescheduling their completion for 1878."

The plan was for SP&P to construct a northern extension, connecting first with the NPR main line near Fargo, then with the proposed CPR branch line at St. Vincent.

Elisha Cleveland Litchfield
One of the brothers who swooped in, bought up several
railroads,  and sold them for profit as fast as possible. . .
Erasmus Darwin Litchfield - genially called "the old rat"...was "ornery" and "obstreperous")

Egbert Savage Litchfield (youngest brother) - Sent to St. Paul at one point to oversee and manage the brothers' investments in the railroad.  In 1868, Egbert became James J. Hill's early partner.  Soon, Hill began emerging as a businessman in his own right.

"The Litchfields' capital propped up the railroad's coffers and accelerated construction into the the state's already populated agricultural regions," and towards the Red River Valley (which the state legislature had recently approved a special act securing $3 million in bonds for railway construction projects...)

TriviaNP used contractors to build the St. Vincent Extension.

To break it down to its simplest terms, the Litchfield brothers simply "went where the money was". [See the Brooklyn Historic Railway Association's incredible article about the slippery Litchfield Brothers, and their particular involvement with the building of the railroad that eventually included the St. Vincent Extension...]
Question: Where did all the money the Litchfields stole from Brooklyn go? 
Answer: To an attempt to take over the lands and railroads of the northwestern United States (Minnesota) via federal railroad land grants and other financial tools, and then mortgage this wilderness property to unwary European investors (the Dutch) at vastly inflated sums.
No doubt E. B. Litchfield used his brother E. Darwin Litchfield, then a London banker, to launder the money hijacked from Brooklyn to acquire all the stock of the St. Paul & Pacific Railroad First Division, their new land and railroad speculation entity in Minnesota, which already owned 307,200 acres (480 square miles) of federal land grants. The Brooklyn loot was likely used as seed money to construct more track in Minnesota, thereby leveraging more massive federal land grants, which in turn enabled E. B. Litchfield to issue more St. Paul & Pacific securities in Holland with these land grants used as collateral.
It should be noted, that the activities of the Litchfield brothers, as well as that of governmental officials, was quite the norm for the time period. In fact, "Robber Baron" business practices as well as "Urban Machine Politics" are considered to be two of the three "antecedents" of Organized Crime in the United States. (See Organized Crime by Howard Abadinsky, 1997, pg 39-69.)

Trivia: The construction of the St. Vincent extension was promptly put under contract, and large quantities of rails and fastenings for track were imported from England. These were of iron, weighing 30 pounds per linear yard, and went from Buffalo to Duluth by lake. Their cost at the latter point was reckoned at about 90 per ton. Construction proceeded with vigor, and, for the methods of those times, with rapidity, until shortly after the financial collapse in 1873. [Source:  Minnesota Historical Society, James J. Hill Papers "The Great Northern Railway System"]

1 - The Associates were George Stephen, Donald Smith, James J. Hill, Norman Kittson, and E.S. Litchfield. Hill enlisted the support of Donald Smith and his equally wealthy cousin, George Stephen, of the Bank of Montreal, in getting control of the steamboat business on the Red River, the route to Winnipeg. Their syndicate, “George Stephens and Associates,” comprised Stephen and Smith, as the financiers, Norman Kittson, The Hudson’s Bay Company’s Minnesota agent, operating the steamboat line, and Hill, their St Paul freight forwarder. Once in control of steam navigation on the Red River, the Associates then went after the bankrupt St. Paul and Pacific Railroad which they intended to complete to the Red River and a connection with Kittson’s steamboats.