The drift of affairs had been watched by three deeply interested persons. Donald A. Smith, residing at Winnipeg and representing that city in the Dominion parliament, was chief commissioner of the Hudson’s Bay Company. That company had many millions of acres of land in Manitoba, and was desirous to obtain railroad connections through Minnesota with the outside world. He particularly desired the completion of the St. Vincent Extension. Another was Norman W. Kittson, an old associate of Sibley in the fur-trade and politics, still interested in the Red River trade. The third was James J. Hill, who had come from Canada to Minnesota as a boy of eighteen in 1856. He had been in Mr. Kittson’s employ in his Red River business, had built up a rival line of steamboats and barges, and made it for Mr. Kittson’s interest to take him into partnership. These three men had journeyed up and down the Red River till they knew every foot of the stream and the lands drained by it. Early in 1874 Mr. Smith asked Messrs. Kittson and Hill to collect for him all the information accessible in regard to the St. Paul and Pacific system, its lines completed or unfinished, its terminals, equipment, land grants, and in particular the stock and bonds. The consultations which followed were fruitless. “There seemed no way to get in.”
Two years later, when it became evident that the Dutch bondholders were bound to realize what they could and let the properties go, there appeared a way to get in. 1876 was one of the grasshopper years in Minnesota. The crop was light and prices were low. Rates and fares were so high as to discourage railroad traffic. The net earnings of $300,000 on the system were a drop in the bucket compared with the interest charges of nearly $2,000,000. In March, 1876, Mr. Hill and Mr. Smith were again in consultation, and resolved on an effort to obtain control by buying all, or nearly all, the bonds held in Holland. Delays and discouragements postponed action. It was not till May, 1877, that Mr. George Stephen, president of the Bank of Montreal, was induced to consider taking a hand in the deal. In September, after a visit to Minnesota, he went to England in full expectation of enlisting the necessary capital, the Dutch committee having accepted a conditional offer of cash for their holdings. To his surprise Mr. Stephen found no English capitalists willing to send good money where so much bad money had gone. To all appearance the project was a failure. The associates, however, learning that the Dutch were still fierce to sell, submitted to them in January, 1878, a proposition to buy their bonds at agreed prices and pay in the bonds of a new company to be formed, which should buy the properties at the now impending foreclosure sales. As a “sweetener” they were willing to throw in $250 of six per cent. preferred stock with every $1000 bond of the new company.