iscovered that the company
was insolvent and had no funds to pay quickly maturing obligations.
Receivers were appointed also for most of the branch lines, including
the Wisconsin Central system. The Oregon Short Line, which was tied
through guarantees with the Union Pacific although leased to the
Northern Pacific, was involved in the general crash but was later
separately reorganized.

To rehabilitate the Northern Pacific Railroad effectively was a
difficult problem. Its debt was enormous; its roadbed and rolling stock
had been neglected; and, as a result of the recent crash, its valuable
feeders on both east and west, the Wisconsin Central and the Oregon
properties, were removed from its control. Besides these adverse
conditions, competition of a serious nature was looming up. James J.
Hill had for many years been quietly developing the Great Northern
Railway. This great system he had financed in an extremely conservative
manner; he had extended it through territory where construction costs
were low; and he had secured control of branches and feeders which might
have come under the sway of the Northern Pacific had that company been
more farsighted. Hill had operated his road from the beginning at
very low cost; he had kept its credit high; and even in the period
of financial depression he had reported large profits and had paid
substantial dividends on his stock. With such a competitor in the field,
it really looked for a while as though the Northern Pacific could have
no future whatever.

Finally, in May, 1895, a plan sponsored by Edward D. Adams, representing
New York interests and those of the Deutsche Bank of Berlin, proposed a
practical merger with the Great Northern Railroad Company: the old stock
and bondholders were to make all the sacrifices and to supply all the
new capital, and the Great Northern was then to be presented with half
the stock of the new company, in consideration for which it was to
guarantee the new Northern Pacific bonds. The situation was somewhat
similar to that which existed in New York State as early as 1868 when
Commodore Vanderbilt had achieved his great reputation as a wizard at
railroading by acquiring the Harlem and Hudson River railroads and by
forcing the New York Central lines to terms. James J. Hill had become a
modern wizard, and the only hope for the Northern Pacific seemed to be
to lay the road at his feet and ask him to do with it what he had done
with the Great Northern--m