However, while Kansas City presented a challenge to Chicago by siphoning off its meatpacking industry, in truth, Kansas City was still dependent upon Chicago to gets its products to East Coast markets, as all rail routes from the West to the East converged at Chicago. As such, Kansas City would remain a satellite in Chicago’s economic universe. A much greater challenge to Chicago’s economic monopoly in the Midwest, however, would be posed by the emergence of the twin cities of Minneapolis/St. Paul, that were poised to administer a two-pronged attack on Chicago’s dominance in the West. On Sept. 8, 1883, former President Ulysses S. Grant drove the final spike, completing America’s second transcontinental railroad, the Northern Pacific that stretched from Duluth, MN, at the westernmost point on the Great Lakes, to Puget Sound on the Pacific. We have seen in Vol. Two, Sec. 4.2 that Philadelphia’s premiere financier, Jay Cooke, had started the construction of the line, only to have Bismarck’s demonetization of silver eventually cause the tightening of interest rates and Cooke’s bankruptcy on September 18, 1873, with the ensuing Long Depression of 1873-1879. While those who fell into receivership of the line continued to fitfully push it westward, a line from the Pacific was also being driven east. This was the result of one man, Henry Villard, a German dual-citizen, who had become the Pacific Northwest’s rail mogul following the Panic of 1873 by overseeing the consolidation of a transportation system in Oregon financed with European investment. He eventually succeeded in absorbing the nascent Northern Pacific, whose headquarters by this time was located in St. Paul.
St. Paul geographically completed the emerging transportation system in the Northwest as it was located at the headwaters of the Mississippi River, the northernmost stretch of flatland after the river emerged from its northern valley. As such, St. Paul was the region’s entrepôt for river traffic. While the Northern Pacific had struck out due west from Duluth on Lake Superior towards its ultimate terminus on the Pacific, all that was needed to link St. Paul and the Mississippi River that lay some 150 miles to the south of Duluth, with this emerging connection between the Great Lakes (thereby completely bypassing Chicago) and the Pacific was a rail line north to Duluth (similar to how the canal at Chicago had linked it to the Mississippi). This was completed in 1870 in the guise of the St. Paul & Pacific Railroad.
The regional economy was fleshed out with the addition of Minneapolis that was built on a branch of the Mississippi at the Falls of St. Anthony, the only cataract on the river. The 25-foot drop in the river elevation at this location provided the largest source of waterpower in the Midwest. All one had to do to harness this potential was to divert a portion of the upper river with a channel to a waterpit that dropped to the lower level downriver and place a waterwheel in the pit, nature could then grind wheat or saw timber. Two of the Northwest’s natural resources, wheat and timber, that had been central to Chicago’s regional dominance during its initial growth in the mid-nineteenth century, could now be processed less expensively closer to their source and transported directly to market, completely bypassing Chicago. By the mid-1880s, Minneapolis was home to the largest flour-milling complex in the country, with over 25 flourmills and their accompanying storage elevators on the west shore of the falls, that was complemented by a large concentration of sawmills that were originally built on the opposite shore. The period 1880 to 1890 would be known as the “Minneapolis Boom.” In 1880, the city’s population was 46,887, by 1890 it had grown to 164,738, which represented a 250% increase in population during the decade.
All that was needed to set this huge economic engine into action was a completed Northern Pacific Railroad that occurred in September 1883. By 1883, a second and competing rail network had also emerged in St. Paul, out of the original St. Paul and Pacific Railroad that would eventually become the Great Northern Railroad in 1890, built by St. Paul entrepreneur, James Jerome Hill. Minneapolis/St. Paul lay at the hub of a burgeoning railroad network that could give Chicago a run for its money. So it should come to no surprise that the Twin Cities would be a center of intense real estate speculation in the 1880s. In 1882, it was reported that St. Paul had led the nation in new construction, with over 4000 new buildings. The following year, the twin cities recorded a combined total of $17.8 million in new construction, a sum that again surpassed Chicago’s, and was second only to that of New York. As early as 1876, so sure were they of their city’s future, that St. Paul’s civic leaders were boasting that St. Paul would join New York and Chicago as the third great city in the U.S.
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