Chapter 18

The Struggle for Land Grants
1856

For some five years Wisconsin railroad companies had been lobbying in Washington for a federal law that would grant the lands of the public domain to Wisconsin to aid in the construction of railroads. Among these lobbyists were the Milwaukee & Mississippi, the St. Croix and Lake Superior, the La Crosse and Milwaukee, and the Rock River Valley Union, now known as the Chicago, St. Paul, and Fond du Lac. Year after year Congress had rejected these overtures, as well as those from other states, but in 1856 it had a change of heart. That spring Congress passed thirty such laws, donating nearly fifteen million acres to a number of states, among them Wisconsin.1 Wisconsin's land grant act was largely the result of lobbying by representatives of the Chicago, St. Paul, and Fond du Lac Railroad Company—and it was this company that hoped to reap the benefits of the one million acres of prime real estate gained for Wisconsin railroads. The bill was reported on May 20, was then passed by the House and Senate, and was signed into law by President Franklin Pierce on June 3.²

The Wisconsin land grant act designated two rail routes, one northwestern and one northeastern. The lands along these routes would be sold and the proceeds applied toward construction of the railroad(s). The “northwestern land grant route” was designated to run “from Madison or Columbus to Portage City, thence to the St. Croix River or Lake between townships twenty-five and thirty-one, thence to Lake Superior, with a branch to Bayfield.” Its Madison to St. Croix segment was already authorized in the Chicago, St. Paul, and Fond du Lac's charter, and the remainder of the route to Lake Superior reflected the ambitions of that company to connect at the western end of the lake with a Pacific transcontinental railroad. The “northeastern land grant route” was to run from Fond du Lac northward to the Wisconsin-Michigan line. This route was already in the Chicago, St. Paul, and Fond du Lac's charter and was based on its desire to build a railroad to the iron mining country of Michigan's upper peninsula. Each route would receive land for six miles on each side, of which alternate one-mile-square sections were to be sold to benefit its designated railroad. Thus the 348-mile northwestern route would receive 678,000 acres, and the 155-mile northeastern route, 380,000 acres.3

But for the Chicago, St. Paul, and Fond du Lac and Wisconsin's other aspiring railroad companies, the battle wasn't over—in fact, it had just begun. The federal government had donated the lands to Wisconsin, but the Wisconsin legislature still needed to decide which company or companies would build the land grant lines and receive the benefits. The stakes were high, and the railroad companies were ready to go all-out in lobbying state legislators for the prize. As mentioned, the Chicago, St. Paul, and Fond du Lac Railroad Company already held charter rights to a great deal of both of the routes. It was the company that had brought about the passage of the law, and it felt it deserved to be awarded the grants.⁴ But the La Crosse and Milwaukee Railroad Company disagreed, saying that the grant was intended for Wisconsin interests, not Illinois,’ and that it should be the recipient. Other contenders were the Milwaukee and Watertown Railroad Company, the Sugar Valley Railroad Company, and the St. Croix and Lake Superior Railroad Company, all with charter rights to some part of the land grant routes. The state of Wisconsin would have to decide which company would receive the grant. To that end Governor Coles Bashford called for a special six-week session of the legislature to be held in September.⁵

One week after President Pierce signed the land grant bill, a group of leading Wisconsin citizens opposed to the Chicago, St. Paul, and Fond du Lac and in favor of the La Crosse and Milwaukee met at the Wacker House in Milwaukee. In attendance were former Governor William A. Barstow, Lieutenant Governor Arthur MacArthur, former governors Nelson Dewey and Leonard J. Farwell, former Congressman James D. Doty, and James H. Knowlton, a railroad promoter from southwestern Wisconsin. Moses Strong, serving at this point as an attorney for the La Crosse and Milwaukee, presided.⁶ The meeting began on June 10 with company President Byron Kilbourn stating that the La Crosse and Milwaukee was the logical choice for receiving the land grants, but that the company would concede to another railroad company if four conditions were met: 1) the company could not be in competition with the La Crosse and Milwaukee; 2) its routes could not lead more directly to Chicago than to Milwaukee; 3) it would use the grant to benefit Milwaukee; and 4) it would allow the La Crosse and Milwaukee Company to prescribe its route. These terms were accepted by the attendees, probably in the belief that there would be no alternate company and that the La Crosse and Milwaukee was the only eligible contender. The attendees then resolved to enlist influential citizens in the state to join an “association” that would further their cause. They adjourned to meet again in two months.7

When the group reconvened during the first week in August, they chose Strong to chair a committee assigned to draft a bill naming the La Crosse and Milwaukee the recipient of the land grant. Strong, the former speaker of the House and past president of both the La Crosse and Milwaukee and Mineral Point railroad companies, had recently moved from Mineral Point to Milwaukee to work for the “association” project.⁸ There were now sixty “association” members, and each was assigned certain legislators to call on to influence the decision. Doty, one of the association members, was allotted five legislators from the northeast.⁹

In September, as promised by Governor Bashford, Wisconsin's legislators met at the capitol building in Madison for the sole purpose of assigning the land grants. At first the lobbying efforts of Milwaukee's “association” appeared to be successful. The joint legislative committee appointed to draft the bill even used Strong's draft as a template. But then things began to go wrong. It appeared that the Chicago, St. Paul, and Fond du Lac Railroad had gained the confidence of fifteen legislators, and one of them was James H. Knowlton, a member of the “association.” Moreover, Knowlton was on the joint committee handling the bill. He used his influence to modify the bill to make it more favorable to the Chicago, St. Paul, and Fond du Lac—and thus unacceptable to the Milwaukeeans.¹⁰

On September 20 the La Crosse and Milwaukee Railroad Company strengthened its claim to the northwestern grant by merging with the Milwaukee and Watertown Railroad Company. It thereby eliminated a rival for the grant and acquired charter rights to the twenty-nine-mile Columbus-Portage segment, part of the northwestern land grant route. The Wisconsin act authorizing the merger specified that the Madison-Portage line would be used for allotting lands, but the La Crosse and Milwaukee, if it were awarded the grant, would be required to build the Madison-Portage and Columbus-Portage lines simultaneously. Kilbourn next negotiated an agreement with former governor William A. Barstow, the president of the St. Croix and Lake Superior Railroad Company, whereby the St. Croix and Lake Superior would hold the rights to the land grant between Hudson and Lake Superior, and the branch to Bayfield, but be controlled by the La Crosse and Milwaukee. As part of this deal the St. Croix and Lake Superior would convey all its property, rights, and franchises to the La Crosse and Milwaukee in return for one million dollars’ worth of La Crosse Company bonds.11

On September 30 the Chicago, St. Paul, and Fond du Lac's president, William B. Ogden, came to Madison and addressed the legislators. He pointed out that his road was financially sound and that it had charter authorization for both the northwestern and northeastern land grant routes. He stated that the Chicago, St. Paul, and Fond du Lac had already constructed most of the road from Chicago to Fond du Lac, where it would connect with the northeastern route. And he reminded them that his company had worked long and hard to obtain this grant for Wisconsin. He asked that it be granted both routes. If that was asking too much, he said, it should at least be granted the northeastern route.¹²

Kilbourn now changed his plans, deciding to promote the La Crosse and Milwaukee to receive the northwestern grant and a new company to receive the northeastern. He had Strong draft a modified bill. He then enlisted a member of each legislative house to take charge of matters on the bill's behalf. Representative Thomas Falvey of Racine agreed to do this in the Assembly, while Senator Jackson Haddley of Milwaukee would do so in the Senate. Kilbourn, Strong, Falvey, and Haddley worked over the next several weeks to gain the support of representatives from all sections of the state. They described the benefits that the passage of this bill would bring Wisconsin, by giving the grants to Wisconsin railroads rather than to a Chicago-based railroad. Kilbourn and Strong went several steps further. They met privately with legislators, treated them to oyster dinners, and suggested that monetary rewards awaited them if they voted for the bill and it passed.¹³

In October promises of “pecuniary compliments” were extended by Kilbourn and Strong to the governor, the governor's private secretary, the lieutenant governor, the state comptroller, the clerks of the Assembly, senators, and assemblymen. Technically, they were not offering bribes, which would have meant payment in advance for votes. There were laws against that. Kilbourn and Strong were simply promising a “gift” to be given to those that voted for their bill after it passed. In the railroad business it was common, even expected, for company directors to receive gifts from contractors to whom they had awarded contracts. Why not in government? It was a “grey” area at best, and Kilbourn and Strong specialized in dealing with “grey” areas. They promised Governor Bashford fifty thousand dollars’ worth of La Crosse and Milwaukee bonds, senators ten thousand dollars’ worth, and assemblymen five thousand.

While most of the targets of these “gifts” were receptive to the idea, some, such as Senator C. Latham Sholes of Kenosha, who would later invent the typewriter, and Senator Amasa Cobb of Iowa County were not. Cobb related that:

Some five or six days before the final adjournment of the said adjourned session, Mr. William Pitt Dewey, who was then the assistant clerk of the Assembly, invited me to take a walk with him, and while walking around the capital square in the city of Madison, he [Dewey] introduced the subject of the bill granting the lands which had been granted to the State of Wisconsin to aid in the construction of certain railroads, to the La Crosse and Milwaukee Railroad company, and which bill was then pending before the Legislature. During said conversation he informed me that should said bill pass, he would get a quantity of bonds. He stated the amount that he was to receive, and to the best of the recollection of this deponent, it was ten thousand dollars. He asked me what amount would induce me to cease my opposition and support the bill, or come into the arrangement. I asked him why, or by what authority he made the inquiry? He replied that he had come right from Kilbourn and was authorized by him to say that I might make my own terms. … He further stated that “they were bound to carry it through anyhow, and that I might as well make something out of it, as the rest of them. … I asked him what was the amount of the capital stock of the company? He replied [,] ten million dollars. I told him to say to Byron Kilbourn that if he would multiply the capital stock of the company by the number of leaves in the Capitol Park, and give me that amount in money, and then have himself, Moses Strong, and Mitchell blacked, and give me a clear title to them as servants for life, I would take the matter under consideration.14

With offers being made to so many, word began to spread. Knowlton, by this time one of fifteen legislators in the pay of the Chicago, St. Paul, and Fond du Lac, complained on the floor of the Assembly that “men were bragging in the streets that they had bought up a majority of the legislators."¹⁵ This so alarmed Strong that he took his bill to a printer and promised him a one hundred dollar bonus if he would work through the night. So expedited, the bill awarding the northwestern grant to the La Crosse and Milwaukee and the northeastern grant to a new Wisconsin and Superior Railroad Company that would reflect Wisconsin interests, rather than those of Chicago, came to a vote. On October 6 it passed in both the Assembly and the Senate. But to everyone's surprise, Governor Bashford vetoed it, contending that it violated the Wisconsin constitution (Article IV., Section 18, Title of Private Bills) by dealing with more than one subject—in this case, both the northeastern and northwestern routes.16

Kilbourn then met with the governor to discuss the changes that would need to be made in order for the bill to be signed. Two days later, assemblyman John Fox Potter of Fond du Lac introduced two bills in the Assembly. One granted the northwestern grant to the La Crosse and Milwaukee Railroad Company, its wording virtually identical to that of the earlier bill. The other granted the northeastern grant to the Wisconsin and Superior Railroad Company, incorporated in the bill. The first bill, aided by Kilbourn's promises of pecuniary rewards, passed sixty-two to seven in the Assembly and seventeen to seven in the senate. It was signed into law by Governor Bashford on October 10. When news of the law's passage reached Milwaukee, its citizens were jubilant, holding torchlight processions and lighting bonfires in celebration.¹⁷

This law differed from the federal grant by requiring that both the Madison-Portage City and Columbus-Portage City roads be built, and required that they be built within ten years. It specified that when twenty miles of road were completed and certified by the governor, the secretary of the interior in Washington would convey titles to 240 sections of land to the La Crosse Company. After that, for each succeeding twenty miles of completed road, another 120 sections of land would be conveyed. Once the land-grant railroad was operating, it would pay ten percent of its gross income to the state in lieu of taxes.¹⁸ The bill for the northeastern grant had also passed the legislature, but was being held up by Governor Bashford, who was insisting that two more directors be allowed on the board of the Wisconsin and Superior and that the appointees be his brother and assemblyman Potter. The changes were made, and Bashford signed the bill.¹⁹

After the land grants were awarded, the recipient La Crosse and Milwaukee and Wisconsin and Superior railroad companies faced new challenges. The former had to discreetly distribute its “gifts,” and the latter had to fight off a takeover. Shortly after the passage of the first bill, Kilbourn called on Governor Bashford. Kilbourn recounted:

I called on him … and being informed by him that he had approved the act, I expressed to him the deep sense of gratitude which I felt. … I also took that occasion to express the friendly sentiments … and that … the company felt disposed to extend to him a pecuniary compliment. … He said that… he … would accept of it cheerfully. I then stated that I would … place in his hands the bonds of the company to the amount of fifty thousand dollars. … There was no corrupt intent in this transaction with Governor Bashford. … I deemed it necessary to propitiate his feelings with reference to the future operations of our company by an act of such liberality.… Such were my only motives. … On his part I believe he accepted it for the reason that he thought the company could well afford to make such a donation without doing it any material damage while to him the sum was large enough to offer a real benefit.20

The distribution of these “pecuniary compliments,” or “gifts,” by the La Crosse and Milwaukee was done discreetly, which was surprising given the number of recipients involved. It had been decided that all of these recipients would go to Milwaukee to collect their rewards. There, in the company paymaster's office on Third Street, Strong would receive them. Strong made a numbered list of the recipients. He then made a second, identically numbered list, on which the recipients were not named, but the amount due them was. Strong prepared the packages, one for each claimant, each with the appropriate number of bonds. He wrapped them in plain paper and on each wrote the number of the recipient. Strong and Kilbourn then destroyed the second list so that there was no longer any record of what was in the packages. Between October 15 and 21 Strong handed packages to a steady stream of claimants. Among them were the governor, the lieutenant governor, bankers, businessmen, senators, assemblymen, clerks, jurists, various other state officials, and newspaper editors. In all, Strong distributed $862,000 worth of bonds that week.

Meanwhile the La Crosse and Milwaukee's directors had voted themselves “gifts” as well, bringing the total cost of securing the land grant to more than a million dollars. Strong received $25,000 dollars’ worth of bonds for his services. All but eight of the legislators who had voted for the bill received a package, and those eight had been compensated in other ways.²¹ Legislators who had not voted for the La Crosse and Milwaukee bill, Cobb and Senator John Fitzgerald of Osh-kosh among them, did not receive a package. Senator Fitzgerald contemptuously referred to the "gifts" as the "sweepings of the Capitol.”22

Shortly after the legislative session ended, the Chicago, St. Paul, and Fond du Lac Company began making overtures to take control of the Wisconsin and Superior. Its intentions were revealed at board meeting in Oshkosh, at which Governor Bashford was present. Officers of the Wisconsin and Superior Company included James H. Weed of Oshkosh; Herman Haertel of Milwaukee; Benjamin F. Moore of Fond du Lac; Perry H. Smith of Appleton; and T. B. Bigelow.²³ A group of eight directors of that company, among them Doty, pledged to refuse all Chicago offers.

But these pledges, it turned out, could be bought. As more money was offered, one director after another stepped down and was replaced by a Chicago nominee. Doty succumbed after accepting forty-two shares of stock in the reorganized company and a promise of forty-one more shares if he would not make trouble. In all, William B. Ogden and the Chicago, St. Paul, and Fond du Lac Railroad Company spent $ 170,000 on the takeover. Many Wisconsin residents approved. They wanted the northeastern land grant railroad built as quickly as possible, and the Chicago, St. Paul, and Fond du Lac Company was in a position to do that. Also, many of them owned stock in that company, either in individual subscriptions or in the form of Janesville or Fond du Lac city bonds.

If Congressional land grants were the “big plums” for railroad companies at that time, then Kilbourn and Strong had been a long time in getting one. They had incorporated the La Crosse and Milwaukee in 1852 for the purpose of receiving a Congressional land grant and had in the same year lobbied in Washington for such a grant. But the Congressional land grant bill for Wisconsin had died in the House, and a similar measure did not come up again for several more years. Now, four years later, Kilbourn and Strong had capitalized on the lobbying efforts of the Chicago, St. Paul, and Fond du Lac, and snatched away one of its “big plums” for their La Crosse and Milwaukee railroad. Their methods had been secretive and questionable, and the monetary price they induced their company to pay in gratuities to people of influence was high. It remained to be seen whether or not they, the La Crosse and Milwaukee Railroad Company, or the citizens of Wisconsin would benefit from their actions.