Business & Finance: Real Pioneer v. Heartless Giants

”Real Pioneer” v.

“Heartless Giants”

“In the 1890’s when conducting my logging operations in northern Minnesota, I was 200 mi. from the point on Rainy River where International Falls, Minn, and Fort Frances, Ontario are now situated. . . . It was midwinter and a blanket of snow three feet deep made travel difficult. There were no roads. Accompanied by my head timber cruiser we covered the distance on foot and finally arrived at the Hudson Trading Post, one beautiful moonlight night after midnight with the thermometer at —40°. I viewed the wonderful water falls there and decided to become a real pioneer. The outcome was the building of 200 miles of railroad … the development of water power and paper mills on both sides of the river, the purchase of timber holdings in large amounts, and finally a total investment of $50,000,000.Why should I not strive to rehabilitate this organization which has been my life work?” Thus did the septuagenarian founder of big Minnesota & Ontario Paper Co. lately write the unhappy holders of his defaulted bonds. But Founder Edward Wellington Backus was unhappier than his bondholders. Unable to refund a bond issue, the $100,000,000 paper company in which he owned 90% of the common stock passed into receivership in 1931. Founder-President Backus was later ousted as sole receiver by bankers who put in two of their own co-receivers. They promptly sued Founder Backus for $7,000,000. That was too much for Founder Backus. Last week in Minneapolis he launched a mighty campaign for a comeback. He asked the court to dismiss the receivers, charging them with gross mismanagement, inefficiency and squandering some $12,000,000 of Minnesota & Ontario’s assets. To a circular the receivers had distributed to bondholders, he countered with a $2,000,000 libel suit. He hired press-agents and mailed to bondholders his own pamphlet with a full text of his suits. a quotation on corporate reorganization from The New Republic and another personal appeal. Excerpt: “I understand that Eastern Bankers and the Receivers . . . are evolving a scheme to seize the properties of our company for a mere fraction of their value. . . . Heartless Financial Giants … and their allied Newsprint competitive company have marked us for their prey. . . .” Edward Wellington Backus was taken to the Minnesota prairies as a child during the Civil War. He worked his way through four years of college, tried carpentering, tried bookkeeping and finally borrowed $3,000 to buy a one-half interest in a small lumber company. Lumber led to paper and paper to International Falls, where he organized his own bank, formed his own telephone company and, after James J. Hill refused to enter the territory, built his own railroads. A rugged individualist of the Ford school, he hates & fears the banker, denounces all curtailment agreements among newsprint makers as “restraints of trade.” Last week when the banker regime in his old company pooh-poohed his libel suit, he said: “A $1 award means victory, vindication.”