From Walter Van Brunt’s Duluth and St. Louis County, Minnesota Vols. 1 – 3. The American Historical Society. Chicago: 1922. Available at the Duluth Public Library.
Duluth Checked (1873–1877)
The failure of Jay Cooke produced a panic at the Head of the Lakes, and particularly at Duluth, somewhat like that of 1857, when three-fourths of the population fled before the close of navigation, dreading the hardships of winter in an undeveloped region.
The Exodus from Duluth
The exodus of 1873 was not brought about by like reasons, because Duluth then had ready communication with the outside world, whereas in 1857 the coming of winter meant that the few left in that “outpost of civilization” would be snowed-in, or “iced-in” for the winter-for six months. In the prosperous years of the early ‘70s, however, thousands had come to Duluth only because they could there find abundance of work; but the failure of the great Philadelphia banker meant the cessation of all railway construction at and beyond Duluth, and the crippling of almost all other enterprises at the Head of the Lakes; therefore, the bulk of the laboring class had, perforce, to seek employment elsewhere.
It was a critical period for Duluth. From about 5,000, the population “was reduced to 1,300 souls,” stated one writer, who also wrote as follows: In 1873, when everything seemed brightest, a cloud from out a clear sky settled down upon the business world. Jay Cooke, who had furnished the means for the construction of the Northern Pacific Railroad, failed. So suddenly did the blow fall that business was paralyzed and a panic ensued, similar in its depressing and wide-spread effects to that of 1857. The first receipt of the news in Duluth was scarcely credited, but the next day came full confirmation with details of more disastrous effects and more direful forebodings.
From the giddy height of a veritable boom Duluth fell into a very slough of despondency. Real estate values went down, down, down… City orders were relatively about as valuable as Confederate bonds. The engineer of the steam fire-engine resigned his position because, as he said, “the city’s credit is not good enough to purchase oil for the engine.” The Clark House, the leading hostelry of Northern Minnesota, boarded up its west-end corridors, and carried on a lifeless business in the center and eastern portions. The crowd of speculators who had thronged its steps disappeared, as by magic, and discouragement and hopelessness seized upon the spirits of the people. Then followed for several years, a period of business stagnation and general depression which seemed to grow only more severe as time passed.
Banks failed, goods of all kinds were sold at sheriff’s sale, and vacant houses and business blocks added to the general air of desolation. Those who could do so moved away, and the city’s population was reduced to 1,300 souls.
Effect of the Money Panic
Editor Mitchell wrote of the panic thus:
The people of Duluth, and the people of the country, never dreamed that so strong a firm as Jay Cooke and Company was in the least danger of becoming financially embarrassed, but, on the 18th day of September of that year (1873), like a clap of thunder from a clear sky, came the announcement that all of Jay Cooke and Company’s banks had gone to the wall, and the result was that their failure precipitated one of the greatest panics in history.
Of course all work on the Northern Pacific was stopped at once, and as it was not known when it would be resumed there was an utter state of demoralization, especially in Duluth, which had sprung up like magic and whose business chiefly depended upon its being the supply point for the Northern Pacific Railroad. I am safe in saying that inside of sixty days more than half of the men engaged in trade in Duluth went out of business, many of them going bankrupt and the others selling out for what they could get, and… left the place.
George R. Stuntz said:
In the crash of 1873, Duluth got a fearful setback; and in 1874 people began to scatter up and down the lakes, and to the wheatfields of Dakota and Minnesota in the Red River Valley. Many people bought vacant houses (from well-nigh deserted towns along the railroad) and moved out on the prairies. Houses were dirt-cheap; one could not sell a lot for a barrel of flour to save him from starvation.
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