CHAPTER 6
FREDERICK’S PARTNERSHIP PLAN HAD ONE PROBLEM: Denkmann had almost no money. But Frederick devised an innovative solution. He would advance Denkmann the funds needed from his own savings. Each partner was to have a stake in the partnership equal to three thousand dollars at the outset. Frederick, in his later years, remembers the transaction in round numbers in his account to Bancroft Hill: “So I proposed to him that we join together and buy the mill. We formed a partnership. He put in his groceries and horse and wagon, valued in all at about $800; and as I put in about $3,000 more than he, I advanced him another $3,000 to put in, for which he was to pay me 10% interest.”
The partnership’s detailed accounts, offered by John Hauberg, differ somewhat from Frederick’s general recollection. According to Hauberg, Frederick put in $4,616.51 (some of it in goods and animals), while Denkmann’s total contribution was $1,607.03, including his groceries and wagon valued at $800. The difference for Denkmann was a debt to Frederick of $1,504.74.
There was clarity, however, in the agreement on what they would do: “That they, and each of them will give their attendance and do each of their best endeavors, and to the utmost of their skill and power exert themselves for their joint interest, profit, benefit and advantage and truly employ, buy sell and merchandise, with their joint stock, and the increase thereof, in the business aforesaid.”
The partnership agreement was written in English on foolscap, and John Hauberg notes that “[the agreement] was said to be in the hand of Mrs. Denkmann,” but F. E. later wrote that “it is evident that Michael Koch [another of Frederick’s brothers-in-law] was the author of the Articles of Agreement, in spite of the fact that his name does not appear.” F. E. also notes that, given a lack of facility with English, “Father associated almost exclusively [for some time after coming to this country] with men who spoke the German language…It is remarkable that the document was drawn up in English rather than German.”
A family story has it that once Denkmann and Weyerhaeuser agreed to go into partnership, Denkmann continued to work openly on his wagon for the westward trip, while Frederick maintained publicly that he would never bid on the mill structure without his brother-in-law Denkmann’s participation. By this strategy they hoped to get James to accept less for the mill than he might demand if he thought the sale was a sure thing.
To some degree their plan worked. The idle mill, which had previously been sold for much more (once for $15,700 and another time for $17,000), was awarded to the Weyerhaeuser-Denkmann partnership for $3,859.72. The partners paid $500 of their own money down, using credit for the rest of the purchase. The remainder of their pooled capital was to be their business operating fund.
What the two men bought that spring was not exactly title to the mill but a mortgage lien on the property, which would have to be processed through the court system. John K. James signed a document that, in consideration of $3,859.72, assigns all of the rights, title, and interest to the mill and the eighteen town lots adjacent to it to the Weyerhaeuser and Denkmann partnership. But for some time, even after the new partners began operating their mill, the brothers-in-law did not have clear legal title to the property. That was achieved only after fifteen months. That they began their partnership with property still entailed is evidence of their trust in the future.
John Hauberg wrote a description of their situation nearly one hundred years later:
Purchasing a property and knowing the exact date of purchase, with no further worries about securing title is one thing, but to enter into business with a hazard, such as these two men had, must have taxed their nerves, i.e., the partnership agreement May 1860; taking over and starting the saws with a more or less precarious sheriff’s sale not coming on until eight months have passed at which it is any creditor’s right to bid and be the highest bidder; and after that having to wait another fifteen months before they are sure of their bargain—for by that time the two of them doubtless proved the mill was a good investment—a load must have dropped from their shoulders when the last legal hurdle had been negotiated.
Under date of May 15, 1862, the sheriff of Rock Island County executed his deed of conveyance for the mill-site to Weyerhaeuser and Denkmann. Nobody had interfered with their program of securing title to it.
The elements of this initial partnership are classic Frederick, and he would repeat the formula in various ways over the next four decades, culminating in the enormous land purchase from the Great Northern Railroad in 1900. His method was simple: he found a partner to spread the risk; he secured an infusion of capital from another source; and he used his good credit to finance purchase of the mill and nearby land, preserving much of the capital for running the operation. He built the partnership on trust—that Denkmann would do his share in running the mill and pay back his initial loan. Frederick was not disappointed. The business flourished, and Denkmann was able to repay Frederick within three years.
The family theme continued when another brother-in-law, Michael Koch, was also taken on as a colleague a short time later, but the outcome was less satisfactory. Koch’s seminary education made him a first-rate clerk, and he filled the new partnership’s needs competently, acting as office manager, communicator, and paymaster. All of the firm’s early documents and letters are in his hand. Anthony Koch later remembered the partnership. His father Michael, he reported, “did as much work then as half a dozen men do now. He was timekeeper, salesman and book keeper…They were three brothers-in-law and the work of the mill was taken up with all three employed: Koch doing the clerical work, Denkmann as the machinist and Weyerhaeuser good at buying logs and timber.”
Alas, an incident occurred that forced Koch’s separation from the firm and gave an early indication of Frederick’s steely character, especially where loyalty was concerned. Friends had persuaded Michael Koch to run for alderman of Rock Island, and he was elected. However, a thorny issue soon arose in the city council. The Weyerhaeuser-Denkmann sawmill was blocking access of the village fire trucks to the river because the lumber was stacked up in great piles. The city council was asked to make a regulation remedying this situation. Frederick told Koch that he would not tolerate interference in his business, that “he would not stand for it,” as Anthony put it later. But Michael Koch was also stubborn, and he believed he “had taken an oath to do what is best for the city.” A new law to force an opening in the lumber stacks for the fire trucks to get to the river was voted in unanimously by the city council members.
Frederick was angered. He believed that because Koch worked for Weyerhaeuser and Denkmann, he should have voted in the interest of the company. Soon after this incident, Koch left the firm. Oddly enough, Anthony Koch’s memory was that the family was not hurt by this falling out: “They were always friendly brothers-in-law, but never in a business way after that.”
Anthony himself had come to live with his aunt Sarah and uncle Frederick and looked upon Frederick as his “caretaker” from the time he was young. He seems to have borne Frederick no ill will for letting his father go, although he did say that if Koch had done things Weyerhaeuser’s way, it would have been Weyerhaeuser, Denkmann and Koch.
Frederick Carl Augustus Denkmann was the perfect counterpart to Frederick Weyerhaeuser in his personality. Andrew Bloedel, Sarah’s brother, also thought Frederick was “easygoing compared with Uncle [Denkmann].” Philip Bloedel, another of Sarah’s brothers, described the two men who had married his sisters in this way: “Denkmann was a go ahead man. Weyerhaeuser was more slow and easy going.” In retrospect, slow seems an odd term to apply to Frederick, who was already working time and a half at many enterprises. Perhaps Philip intended the description to illustrate the way the two men interacted with others. Where Weyerhaeuser was open and could often tease his children or tell a good story, sometimes on himself, F. C. A. (as he was always called) was unremittingly serious.
Denkmann had been born in Salzwedel, West Prussia, in 1821. Surviving pictures show a man with “small, dark restless eyes” and a “curious” beard that was but a white fringe on his chin. F. E. later recalled F. C. A. as follows: “He was quite a typical Prussian in pride and also in lack of a sense of humor. It was this lack of a sense of humor that got him into many amusing situations.”
F. E. also described his uncle Denkmann as being “quick and highly nervous in action, and possessed [of] unlimited and tireless energy” and as having a “peppery” disposition. He was always in a hurry. The Denkmanns’ house abutted the sawmill property, so he was well situated, as mill manager, to keep an eye on things. Andrew Rietz, a servant in the Denkmann home, later told this story: “The whistle [for the sawmill] blew at six o’clock in the morning; if it was a weak whistle, Mr. Denkmann knew they did not have the steam up the way they ought to have, and he would be out there in a minute to see what was the matter.”
Weyerhaeuser and Denkmann were complementary in ways other than personality. F. C. A. had a machinist’s talent and training, while Frederick had already displayed a natural liking for people that led him to sales. Frederick also was a good negotiator, loved to bargain, and was rapidly learning the lumber sales business. F. C. A. seemed much happier to be taking care of the machines than traveling the roads and forests or talking to customers. Given the division of labor, the partnership flourished.
Many family stories about F. C. A. show him as a man of stamina and courage in any incident that put his business at risk. One time Denkmann was watching the mill’s muley saw perform when a slab swung around and hit him in the side of the head. A large raw beefsteak was required to assuage that wound, but there were no complaints. Another time he saw a boom holding a raft of loosely tied logs pull away from its moorings and the raft of logs shoot downriver. Denkmann managed to run out on the logs to try and stop them, but he was immediately pulled under by the current. Only his hat remained on the river’s surface. Those trying to save him kept following, as they could see him bob up at regular intervals. When he was finally rescued, the first thing he said was, “Where’s my hat?”
No matter the extent of his own talents, one may surmise that it must have been hard from time to time for Denkmann to see his younger kinsman forging ahead, with an obvious talent for organizing and selling and for the public life. Some natural competitiveness arose over their lifetime, and Denkmann occasionally gave voice to his frustration.
One such anecdote showing these human feelings occurred at a meeting of the Cloquet Lumber Company in northern Minnesota in later years. When the minutes of the previous corporate meeting were read, Denkmann was offended by the omission of his name, while Weyerhaeuser’s had been included. Denkmann had been absent from the earlier meeting, so he was not on the roll of attendees, as Weyerhaeuser was. F. C. A. exploded in anger, saying, “Weyerhaeuser, always Weyerhaeuser, Denkmann not any. I adjourn!” He rushed for the door. The Cloquet Lumber Company president, Mr. Shaw, hurried after him to explain why his name was not read, but Shaw was unable to persuade him to return.
On a later occasion a Michigan lumberman, Ezra Rust, was visiting with Denkmann on a car trip in northern Minnesota. He remarked that Frederick Weyerhaeuser must have amassed a considerable fortune through his efforts in timber over the years. Denkmann’s tart reply, with his German accent, was, “I got jus’ so much as Fret!”
From Frederick’s perspective, this initial partnership was a combination of talents. He knew that Denkmann was a good machinist and would contribute on-the-ground knowledge and hard work to the proposed collaboration. Frederick was beginning to understand his own competencies as well. He thought their fledgling company could manufacture about three million feet of lumber a year and eventually hoped it could be ten million, a goal they did, in fact, achieve a few years later.
Denkmann ran the mill, while Frederick was primarily responsible for purchasing logs either at Rock Island or from boom owners on the Black River, the Chippewa River, or the St. Croix farther north. (Frederick was “in the woods” in 1866 when his mother-in-law died.)
Denkmann was responsible for recruiting and managing the mill employees. Reports of the time paint F. C. A. as a tough manager. This characteristic eventually was a benefit to the mill employees, as the business prospered. In 1858 the head sawyers made $1.50 per day at the mill, while seven years later they were making $3.00 a day. But there were hard times in the development of that benefit. Denkmann accomplished this increase in pay by lowering unit costs in the mill and driving his employees to work harder.
Anthony Koch tells another story that illustrates both Denkmann’s discipline and his stubbornness. Early on in the business venture, the workers demanded a holiday on Labor Day. Denkmann refused. The men protested and stayed home. The day after they had taken the holiday, no whistle blew to announce the mill’s opening. When the men came to work, they found the mill closed. It remained closed until the men begged Denkmann to reopen it. Denkmann said to them, “Nun habt ihr euer Labor Day [Now you have your Labor Day].” No doubt the workers learned their lesson. Things were not all bleak for the men, however. Weyerhaeuser and Denkmann were known for paying them on time and in cash.
While Denkmann worked his team hard instead of expanding his workforce, he made further efficiencies by applying his knowledge of machines to invest the partners’ limited capital and credit wisely. He installed an oscillating muley saw and increased sawmill production to twenty thousand board feet daily. He added other mechanical devices, such as edgers, trimmers, and lathe saws. One big purchase was a planing machine that would allow the firm to produce much more finished lumber. The Rock Island Daily Union, on January 16, 1868, reported with some wit: “Heretofore, 50 ft was as long a log as W. and D. [sic] mill could handle. They are now putting an addition to their mill which will enable them to saw timber long enough, wide enough and strong enough for a Republican Platform.”
In these early years, Frederick was also in charge of finances, which included finding other investment opportunities to increase the firm’s capital. In some of the ventures, later described to Bancroft Hill, he did well. Others, especially where he strayed from the core lumber business, might better be termed “good learning experiences.”
One of the better investments occurred when Denkmann paid back the initial $1,504.74 he had borrowed to buy into the partnership. Frederick used the funds to buy some more land in Coal Valley, which he later sold at a profit.
Other choices did not come out so well. His misadventures into the wheat business are a case in point. Weyerhaeuser and Denkmann bought a flour mill for eighteen thousand dollars. This investment appeared to make sense, as the area’s population was growing and there was a great demand for flour. Unfortunately, just at this time an infestation of cinch bugs occurred, and the entire region turned to growing corn instead. Frederick’s initial solution of shipping wheat from Minnesota was not feasible over the long term. Eventually the mill was closed and left to rot, and Frederick experienced his first major investment loss.
Around this time, another of Frederick’s projects failed, not through accidents of nature but because of human weakness. A former distiller, William Eggleston, managed a woolen factory. He needed some investment backing. Frederick later said, “[Eggleston’s] yearly statements showed he was making money. But I did not believe this. He had poor help and dishonest clerks. His son was taken in, which did not help matters.” The business went downhill, and Frederick eventually cut his losses. He was able to retrieve part of his investment by taking some goods and a mortgage on nine houses in Rock Island owned by the unfortunate Eggleston. This experience provided Frederick with early instruction on the relationship between trustworthy help (or partners) and business success.
In the midst of these challenges, lumber sales from the Coal Valley yard and the sawmill operation that Denkmann ran in Rock Island were flourishing. Indeed, the public’s insatiable appetite for building materials was increasing by the day. America was on the move.
While Frederick was experimenting with various forms of trade and investing, larger forces were at work that would have a significant impact on his future. The signal American event of this decade was the Civil War, a five-year crisis that changed everything for decades to come, not only in politics and abolition but in land settlement and lumber as well.
In 1862 it became clear to the people of Coal Valley that the Civil War would be a long, drawn-out affair. A company of men from Coal Valley was organized to fight in the Union Army, and volunteers were plentiful as most of the men in that area were described as “of the pioneer type, unattached and venturesome.”
Frederick was one of the first to be drafted to serve the North in the war, and he expected to go. However, Andrew Bloedel, who was working for Frederick’s enterprises, reported that the men themselves decided Frederick should stay in Rock Island, as he was responsible for creating and sustaining so many jobs. Men could buy themselves out of the service in those days, and that is what Frederick did. A local man, Billie Diesenroth, volunteered as Frederick’s substitute. Andrew Bloedel enlisted in the first group, and the formal induction was held on Frederick’s front porch. Philip Bloedel, another of Sarah’s brothers, enlisted two years later.
Frederick and two other men, A. Donaldson and J. A. Jordan, were appointed as a recruiting committee for Coal Valley. Frederick was elected to the post of secretary. To encourage young men to join the Union army, volunteers from Coal Valley were offered a cash bonus of four hundred dollars at the time of signing—an added inducement to enlist.
The Civil War took the lives of more than six hundred thousand men from the North and the South. The impact was felt keenly in areas as remote as the Illinois-Iowa Mississippi communities. The liberal Germans in Davenport, Iowa, across the river from Rock Island, Illinois, were highly sympathetic to abolition, and when John Brown was hung, the Davenport community lowered its flag to half mast and draped their stores in mourning.
Initially, Rock Island was more in tune with the South. In 1855 the town’s major newspaper changed its name from the Rock Island Republican to the Rock Island Argus in protest of the Republican Party’s antislavery platform. However, after news of the firing on Fort Sumter in South Carolina reached Rock Island, even the Argus called upon its readers to support the Union.
The Rock Island volunteers became Company D of the Twelfth Illinois Infantry. They fought in the battle of Shiloh and the battle and siege of Atlanta and joined Sherman’s March to the Sea. When the war was over, the one thousand men of the Twelfth Illinois Infantry had been reduced to fewer than two hundred. It is not known how many of those men came back to Rock Island. Sarah’s brothers, Andrew and Philip Bloedel, survived and returned to their hometown. They lived into the next century, both dying in the same year—1933. No record of Billie Diesenroth’s fate can be found.
John Weyerhaeuser was only six years old when the war ended, but he had memories later described to F. E., his youngest brother, of the celebration when the men came back: “The men came home in open coal cars from Rock Island…[John] was a little fellow at the time and very much frightened by the shooting, but did not miss the grand barbecue given to celebrate the occasion. A large steer was provided and fully dressed for the party…Speeches were in order, the loyalty and patriotism and sacrifices of our soldiers were extolled by local orators, while the guests partook of the feast, many happy and many crying.”
During the war Frederick had responsibilities as a paymaster for the men, and he recounts going from Coal Valley to Springfield to collect money to give to the soldiers’ families. This assignment might have been in line with his duties as postmaster, a title he held from 1863 until 1867. He continued to develop his business interests while serving his community throughout the war years.
The end of the Civil War was to have a lasting impact on Frederick Weyerhaeuser’s future, but in a way he could not foresee at this point. Many of the demobilized men were paid by the federal government in scrip, which they could exchange for property. This action created a burgeoning land rush in the Midwest and the West. Often men used the scrip to homestead new areas, and their need for building materials fed the young business Frederick and his partner were growing. Population in the prairie states was booming in the 1860s: in Minnesota, it increased 160 percent in that decade; in Kansas, 240 percent; in Nebraska, 326 percent. The push westward had begun in earnest.
But the scrip distribution also had some unintended consequences. Many men returning from the war did not want to homestead in the developing regions, and they sold their scrip at a discount, often to newly organized groups amassing capital to buy rich forestland in Wisconsin and Minnesota. The buyers were frequently timberland owners from states—like Maine and Michigan—where logging had depleted the forests. These men from the East saw new potential to expand their holdings into the midwestern forests. The war veterans’ scrip was their ticket in.
During this time, the Weyerhaeuser-Denkmann partnership was so successful that the five-year evaluation period cited in the original agreement in 1860 came and went apparently without formal action.
Just after the war ended, Frederick began a new phase in his business. He had already been active in Wisconsin for a couple of years, buying timber from the loggers working there. In 1867, he made a greater commitment to the lumber business by directly purchasing stumpage (buying the trees for logging but not the land on which they are growing) rather than just buying logs. Two years later, in order to fill a large contract for lumber, he bought several stands of white pine along the Chippewa River in Wisconsin. Frederick was about to enter the fraught world of Wisconsin logging.