Dixon County, Nebraska - Chapter 7, 1896

Story of a Rascally Little Railroad The Covington, Columbus and Black Hills Narrow Gauge Enterprise Its Rise and Career Its Exploits in Finances and Building and its Final Sale by a Receiver.

Old settlers of the county remember the general anxiety, twenty-five years ago, to have railroad connection with the outside world. In 1869 the so-called St. Paul and Nebraska Railroad company had offered to build such a road if bonds were voted to aid the enterprise. The project fell through and for several years thereafter railroad building here was dormant. But as time went on and the need of such a road grew more urgent, citizens seemed willing to do most anything by way of aid could they but see the cars rolling into Dixon county.

hi July, 1873, their hopes were aroused for a short time by the announcement that the St. Paul and Nebraska Company would that year build from Sioux City to Jackson, twelve miles, and from there to some point in Dixon county. All this was, however, mere talk; the St. Paul and Nebraska Company could not out of its own funds have built a rod of road. It was supposed by many to be simply a scheme to make a stake out of Dakota and Dixon counties.

hi 1S74. discoveries of gold in the Black Hills and the great rush of people to that point increased the railroad fever. Dixon county was on the route then followed from Sioux City to the Hills and it seemed reasonable that the long desired road would now come. Nor were people mistaken. In 1875 several capitalists or pretended capitalists whose lack of funds was compensated by hardness of cheek, came together at Sioux City and concocted the "Covington. Columbus and Black Hills railroad" scheme. It was proposed to build a road commencing at Covington, and running west through Dakota, Dixon, Cedar and Knox counties, and from thence by one branch to the Hills and by another to Columbus, there making connection with the Union Pacific. The name given to the proposed road, "the Covington, Columbus & Black Hills" expressed the points of departure and termination.

After the scheme had been fully prepared, the men in charge of it devoted several months to soliciting aid from several counties. At a meeting of the county commissioners of Dixon county, held November 24, 1875, a committee of smooth and plausible men, mainly of Sioux City, headed by J. B. Hubbell of Mankato, Minn., appeared and submitted their proposition, which in substance was as follows:

If Dixon county will donate to the Covington. Columbus tV: Black Hills Railroad Company, $87,000 in the coupon bonds of said county, dated January 1. 1876, payable in twenty years, with interest semi-annually at the rate of ten per cent per annum, said company will build a railroad from Covington, Nebraska, to and through said county, upon the most practicable route east and west.

When said railroad is graded to the center section line of range five, the builders shall have $20,000 of said bonds, and when the road is completed from Covington into the county three miles, and trains running, the company will receive the remainder of the bonds.

The grading to said center section line to be completed within a year, and the completion of the three miles into the county, within fifteen months from November 24. 1875.

After due consideration, the county commissioners, Messrs. 0. P. Sullenberger, W. H. Clark and J. Martin, determined to submit the proposition to the voters and for that purpose ordered an election held December 27. 1875. At such election five hundred and seventy-two votes were cast, of which four hundred and sixty were for railroad bonds, and one hundred and twelve against, thereby carrying the proposition by more than a two-thirds vote.

The C. C. & B. H. Co. made similar propositions to Dakota county on the east and to the counties of Cedar and Knox on the west, all of which voted the bonds asked for.

On April 20, 1S7C>, the company commenced at Covington to grade their road, and pushed it forward with vigor, hoping to reach Ponca by July 4. that town having been decided by the company to be on the best and most practicable route. The road was not built into the county as soon as July 4, but in September it was completed and cars running between Covington and Ponca, and the grading finished to the center section line of range live, and thereupon the bonds were turned over to the company, $20,000, on September 16th, and $67,000 on September 22; total $87,000.

But though the letter of the contract had been complied with so the commissioners could not refuse to turn over the bonds to the company, yet the road had not been completed in good faith and according to the implied understanding.

The amount of bonds donated, justified the people in believing they were to have a road of standard guage, solidly built, and with the best kind of ties and iron. Instead of that, fraud seemed to be written all over it. A little contemptible affair, with a three and a half foot guage and constructed throughout with cheap and inferior material and labor. No wonder people were disappointed and enraged. They had saddled on the county a debt of $87,000 for a road which could have cost little more than that sum, and the thought naturally arose whether so much fraud and ill faith <m the part of the company did not release the county from paying the $87,000, or any part of it.

In the meanwhile, insignificant as the road would have been in a country where railroads were frequent, its coming gave the county quite a push for a short time. It was supposed there would be more desirable markets for what was bought or sold, that people would come and locate, and that reil estate of all kinds would be more in demand and at better prices. These hopes only in a very small measure were realized.

The benefit was trivial compared with what it would have been had the road been of standard guage and first class construction. Grain, cattle and hogs could then have been shipped direct to Chicago without changing cars at Covington or Sioux City.

The fact was, the cost of sending a car of cattle or produce to Sioux City over the narrow guage and then changing to a car of standard guage was fully as great as it was to send them by wagon in the old fashioned way. Hence aside from the amusement of seeing the little engine and rattle trap train of cars creep out in the morning and creep in at night, one hardly saw any great benefit therefrom and especially a benefit equivalent to the gift of $87,000. When people thought of these matters, and reflected how gross and expensive a swindle it had been to them, how much had been paid and how little received, their indignation grew until almost uncontrollable.

In the spring of 1S77 the work of grading west of Ponca, was resumed. Grading was pretended to be done to the west side of the county and from there to the center of Cedar county and a certain amount of work had to be done before such bonds could be claimed. Fortunately for Cedar county, a sensible mob assembled one day at St. Helena and seized the bonds amounting to $150,000 and made a bonfire of them. Thus that county was saved the grief and expense of a big suit in the United States Court.

Knox county had also the good fortune and good sense to destroy their bonds. Towards fall the company began to feel hard up. There were no more counties to plunder of bonds and hence no more bonds to sell. Men who had worked on the grade for the company, clamored for their pay.

As to the road as far as it was built an 1 operated, it did not pay expenses. Sometimes a run would be made between Ponca and Covington without a single passenger or pound of freight and nine times out of ten there were not over three or four passengers. Not a very prosperous outlook, certainly, for the railroad company.

Towards the fall of 1S77 the company lead a new general manager, one Davenport, who was said to be as remorseless an old scoundrel as ever struck the country. So unpopular did he become in a short time with the workmen that he was in danger of personal violence. Once it was rumored he had been shot by a grader who could get no pay for his work, and it was said by one who had more wit than sympathy, that the rumor was circulated for the purpose of raising the market value of the company's stock.

At one time several hundred unpaid men who had been working on the grade west of New Castle were at Covington waiting for their pay. Either by some knot of red tape or with hopes of wearing them out. the crowd of men were kept dancing attendance from dav to day, all on expense. many of them wholly destitute aid actually suffering for the necessaries of life, waiting for the wages due them, and as it appeared, waiting in vain. The feelings of the crowd seemed exceedingly vindictive towards General Manager Davenport. One day a hungry but resolute looking individual made the following brief remarks: "We are here after our pay and we are going to have it, you bet. If we don't get it. we'll help the devil to foreclose his mortgage on old Davenport." With these words he made a horrible grimace and putting his hand on his throat stuck out his tongue and pointed significantly to a tree near by.

Another story which was told and which helped to excite the wide spread indignation was: A man had worked two months on the grade in Cedar county. His wife and children were in Sioux City. To them he sent the vouchers he had received for his work and his wife went to the office of the C. C. & B. H. Company to get the money. The general manager listened to her request with insolent indifference and gruffly told her he had no money f oilier. She told him of the destitution of herself and family and implored him to pay a part at least. She offered to let him have the vouchers for her husband's work for live dollars. She offered them for $3; for $2; for $1.50. To all her appeals she merely received a grunt of disapproval, and the poor woman retired from the presence of that dignitary in tears and despair.

Such are samples of the numerous stories of injustice which were told of the C. C. & B. H. Company. It is said that hundreds were kept out of their earnings, in fact were never paid, and that not the slightest effort was made by the company to meet its obligations or to relieve the distress of the defrauded workmen. There were in that company two or three honorable men. but they were in the minority and to them these criticisms do not refer.

In September an application was made to Judge Dillon of the United States Court to place the road in the hands of a receiver. The application was denied, but the Judge stated that if the company failed to proceed in good faith and without delay in the construction of the road, a receiver would be appointed.

through the fall, winter and spring and finally in May, 1878, was placed in the hands of Judge Love, of Des Moines, Iowa, as receiver. It was said the company was then indebted for work done on the road to the amount of 175,000 and that not a dollar of it was ever paid.

From that time forward there was nothing done on the road even to keep it in repair. The worthless cotton wood ties crumbled with old age and rottenness and the rails degenerated into two parallel streaks of rust. The little train trundled up and down between Ponca and Covington every day, on time or off, it mattered little, as it generally carried neither passengers nor freight. It was a worthless fraud and had been from the start.

Finally to the joy of everybody, it was. in October, lS7i). sold by order of the United States Court to the corporation now known as the Chicago, St. Paul, Minneapolis & Omaha R. R. Company and in a few months a great change for the better took place. The track was widened to standard guage, new ties and rails replaced the wretched Cottonwood sticks and worthless strap iron and the bridges and road bed were reconstructed. From a roaring and costly farce the road soon became and has since continued one of the best in the state. The ancient habit of running slow (acquired during the days of the C. C. & B. H., when, it was said, the solitary passenger could hold long conversations with farmers plowing in neighboring fields and only ceased when the plow beat the train.) no longer wears time and patience.

As to the $87,000, action was commenced against the county in the United States Circuit Court in 1S7S and was afterwards appealed to the Supreme Court of the United States and there in 1884 was finally decided in favor of the county. Thus freed from claims and out of debt the county could joyfully admit the truth of the maxim that "all is well that ends well."

In this effort to extort from Dixon county $87,000 for three miles of pocket railroad, it was believed that some of the leading business men of Sioux City had much to do, and had played a part as shameless as that of Shylock in his resolve to cut out the heart of Antonio. Whether the belief was well founded or not. it created a distrust of that city which still continues and will require years to remove.