That body had no sooner adjourned than in May (1873) the companies defaulted on their interest. Two corporations, parent and child, owned 433 miles of railroad of light construction and equipment, on which rested $28,000,000 of bonded debt running at seven per cent., and the net earnings for the previous year had been $112,745.57. In August the United States District Court for Minnesota put the mother corporation into the hands of a receiver, but left the stockholders and bondholders of the “First Division” company to wrestle with the business under their legal and stipulated powers. The legislature had in separate acts authorized the bondholders of that company to vote for directors, who might be foreigners, any or all, and provided that meetings of directors might be held abroad. The fact that the Northern Pacific Railroad “interest” had held the major number of shares in both of the Minnesota companies does not modify the foregoing account, but points to the quarter in which to seek for the residence of responsibility, in part at least, for a series of operations hard to account for on presumptions of honesty and common sense. The reader may be curious to follow further, on a subsequent page, the story of the St. Paul and Pacific. * * * * * The panic of 1873 was a typical example. An era of great prosperity had induced a fever of speculation which had spread through all social strata. Not railroads only but ships, mills, factories, mines, fisheries, farms had been built or bought with small sums of ready cash and large sums in mortgage notes. A huge cloud of debt rested over the land. Transactions were so rapid and enormous that bankers loaned out their swelling deposits with a reckless eagerness. One fine morning some conservative institution refused a new discount or declined to renew a customer’s paper. That customer could not pay his creditors, and those could not pay theirs. By nightfall alarm had spread wherever the telegraph lines extended. The next day there were no bank deposits of cash, and credit transactions ceased. Securities offered on the market by hard pressed debtors began to drop, and presently all forms of property depreciated. In the general distrust which ensued, all kinds of industries and business languished, and months passed before even the more modest of credit operations were adventured. Years passed before the full tide of prosperity was again in flow. In a country still new, where capital was small and opportunities for credit operations great, the havoc wrought was extreme. Liquidation and recovery were correspondingly tardy. In Minnesota the panic was accompanied by two disasters which added much to the general discouragement.