Prairie du Chien, Wi. and the Milw. Road - Trains Magazine

My notes:

The Prairie Dog Corner

On January 21, 1861, the Milwaukee & Mississippi was reorganized as the Milwaukee & Prairie du Chien, owning over 736 miles of track. There was some logic in a consolidation of the Milwaukee & Prairie du Chien with the Milwaukee & St. Paul, and even a three-way consolidation with the Chicago & Northwestern had been proposed, but no financial impetus to such consolidation was in the offing. In 1863, the Milwaukee & Prairie du Chien turned down an offer to be purchased by the Milwaukee & St. Paul, and in 1865, the Milwaukee & Prairie du Chien rejected an offer to purchase the Milwaukee & St. Paul. Mitchell continued acquiring stock in the Milwaukee & Prairie du Chien, and by 1866, cooperation between the two railroads seemed to suggest consolidation, however, this was interrupted by events transpiring far away, and completely unrelated to the railroading concerns of Wisconsin.

In New York, the brokerage firm of Henry Stimson & Company began overt speculation in Milwaukee & Prairie du Chien stock. The brokerage had quietly purchased all available common stock of the railroad, and had loaned these shares to various persons and businesses, subject to a short call. In early November. 1865, the brokers suddenly called in all of the stock. The New York Stock Exchange was besieged by traders attempting to purchase shares to satisfy the short call. Milwaukee & Prairie du Chien stock skyrocketed, and the Stimson traders were able to sell their remaining shares at these high prices. The New York Times remarked that the corner was "the sharpest and beyond all precedent the most sudden corner known to the forty years' history of the New York Stock Exchange." Prairie du Chien being French for prairie dog, the corner was memorialized as the "Prairie Dog Corner." Tremendous profits flowed to the speculators. It would happen often with the Milwaukee Road.

The New York speculators retained a majority of the common shares of the Milwaukee & Prairie du Chien stock, but they were surprised to learn that this was non-voting stock according to an unusual provision of the railroad's charter. An agent of the brokerage managed to slip a provision into a last minute legislative measure -- ostensibly designed to regulate petroleum companies in Wisconsin -- but which converted the non-voting common stock of the railroad to voting stock: the speculators now had control of the company, which they offered to the Milwaukee & St. Paul, which accepted, trading share for share.

In 1866, Alexander Mitchell, who had been a director of the Company at its inception and until 1855, and for a period in 1858, became president by virtue of the shares voted on behalf of the Milwaukee & St. Paul ownership.

Since Mitchell was also president of the Milwaukee & St. Paul Railroad, and Russell Sage owned large chunks of both, it was only natural that in 1867, the two lines formally merged, creating the largest rail system in the Midwest. In that same year, the Company acquired the McGregor Western Railroad, which had previously acquired the Minnesota Central (whose mortgages, naturally, were owned by Russell Sage). Milwaukee and St. Paul, Minnesota were linked by rail.