In 1864, Congress chartered the Northern Pacific Railroad and gave it a 50-million acre land grant to build a railroad from Duluth to Puget Sound. President Abraham Lincoln signed the charter on this date in 1864.

The Northern Pacific Railroad was the first railroad company to build in northern Dakota. Railroad construction required a great deal of capital, and promoters had difficulty getting the funds until they persuaded Jay Cooke, a Philadelphia banker, to sell the bonds.

On January 1, 1870, Cooke signed a contract to sell $100 million worth of Northern Pacific bonds bearing 7.3 percent interest. His commission was 12 percent and about 3/5s of the company’s stock.

Cooke promised to have $5 million within 30 days to finance construction from Duluth to the Red River at Moorhead. From there, the promoters would build the railroad as he sold the bonds. He raised the $5 million, but had trouble selling the bonds after that.

However, the Northern Pacific officials arranged construction contracts before Cooke had sold the necessary bonds, and Cooke had to cover more than $5 million with his own bank’s funds.
Finally, Cooke’s funds were exhausted and his company went bankrupt in September 1873. Cooke lost his personal fortune, setting off the Panic of 1873. The Northern Pacific also went bankrupt after that, but was later reorganized.

The first Northern Pacific steam locomotive rolled across the newly constructed bridge over the Red River between Moorhead and Fargo on June 6, 1872. The railroad reached Bismarck on June 3, 1873, and arrived in Beach in 1881. By 1910, there were 4,178 miles of track in North Dakota.

The railroads opened up large sections of northern Dakota, leaving settlers with three options for obtaining land: buying land from the Northern Pacific or from the federal government or getting it free by making improvements under the Homestead or Timber Culture acts.

In 1889, the Northern Pacific was offering its agricultural lands at prices ranging from $3.00-$6.00/acre and its grazing lands at $1.25-$4.00/acre. The purchaser had 5 to 10 years to pay and was charged 7 percent interest on the unpaid balance.

The federal government sold its lands under the Pre-emption Law, and a settler could buy 160 acres for $1.25-$2.50/acre. The person had to live on the land for six months and make improvements.
Under the Homestead Act, a person was given 160 acres for living on the land and cultivating a portion of it for 5 years. He paid $14.00 with the original entry and $4.00 with the final proof of title.
Under the Timber Culture Act of 1873, the settler could acquire 160 acres by planting trees on 10 acres of it. He paid an entry fee of $14.00, with no residency requirement.

The Dakota Boom peaked in 1883 and, in 1878, began to rise again. By 1886, the boom was over. The state’s population rose from 37,000 in 1880 to 191,000 in 1890, and the settlers and land speculators transformed the prairie wilderness.

by Cathy A. Langemo, WritePlus Inc.

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