Congressional acts in 1856 and 1864 gave Wisconsin more than 2.5 million acres of federal land for use as potential grants to encourage railroad construction. The state, which would add large amounts of its own unclaimed land to this total, was responsible for the administration of the granting process. By this device, railroad companies could acquire large and valuable tracts of timberland. By the 1870s the largest stand of untouched forest in the state was an area of northwestern Wisconsin extending to Lake Superior. Some of this land had been reserved by the state for purpose of granting it to a railroad company that would complete a line to the City of Superior.
In 1874, the legislature apportioned approximately 400,000 acres of this land to the Chicago and Northern Pacific Air Line Railway Company (later known as the Chicago, Portage & Superior - hereafter referred to as the Portage RR). The railroad agreed to build a sixty-five mile long section of line running from the St. Croix River at Superior Junction to Superior. In 1878, the legislature extended by three years the period for fulfillment allowed to the railroad.
In 1879 several other railroad lines merged to form the Chicago, St. Paul, Minneapolis, and Omaha Railroad (hereafter: Omaha RR). This railroad had more than one thousand miles of track in Wisconsin, Minnesota, and Nebraska. Oshkosh lumber baron and later United States Senator Philetus Sawyer was influential in creation of this company and became its first vice-president. The company's attorney was another future senator, John C. Spooner of Hudson. The land granted to the Portage RR was also desired by both the newly-formed Omaha Railroad and the Chicago, Milwaukee & St. Paul Railroad (hereafter: St. Paul RR). In 1880, Spooner and the Omaha RR began a legal battle in the federal courts and the state legislature attempting to get this land grant. He argued that the Portage RR was incapable of fulfilling its agreement to complete the line in the allotted time. On January 10, 1882, the Omaha RR and the St. Paul RR entered an agreement to cooperate in acquiring the Portage RR grant for the Omaha RR. In return for helping it get the grant, the Omaha RR agreed to sell to the St. Paul RR 25% of all the land plus rights to use the trackage.
In January 1882 the Portage RR had approximately 1700 men working along its construction route in various labor camps. The company was deeply in debt to its subcontractors. During that month, in a sequence of events that is not clear, two important events occurred. First, the Portage RR went bankrupt, closed its operations and left its employees stranded in the cold without payment, shelter or food. Second, the Omaha RR agreed to purchase two million dollars of Portage RR stock at 10% face value in return for the right to complete its track and acquire its land grant.
As a result of these events, newly-inaugurated Governor Jeremiah Rusk was faced with the first crisis of his administration. On January 26, 1882 he received telegrams from various subcontractors and merchants who had supplied the Portage RR asking for militia protection from unemployed workers who had occupied railroad buildings and seized food and supplies. Rusk also received telegrams from a delegation of workers demanding that he force the railroad to pay back wages. Rusk turned down the request for troops telling the legislature that these men needed bread, not bayonets. At the same time, he proposed that the Omaha RR assume the company's outstanding debts in return for the rights to the granted land. He quickly dispatched State Senator Cyrus M. Butt of Viroqua to Superior Junction to act as his investigator and claims agent. Butt was ordered to ascertain the legitimacy of the workers' demands, to arrange for emergency shelter and sustenance, and to do what he could to defuse the situation. The Omaha RR agreed to Rusk's terms, and it made available $78,000 to pay outstanding wages and subsistence. On February 16, 1882, the governor signed an act transferring the grant from the Portage RR to the Omaha RR.
Butt succeeded in convincing the Portage RR workers to cease their seizures of property and to submit claims for adjudication. He also arranged for most of the workers to be transported out of the area to other areas where they could find work. During the first several months of 1882, Cyrus Butt paid most of the wage claims using the funds set aside for that purpose.
The governor's office continued paying claims until November 1882. Some claims were not paid because they did not fall into the specifications of the original agreement with the Omaha RR. This resulted in a legal action against the governor that went to the state Supreme Court. (The court ultimately declined to intercede on behalf of the claimants.)
The Omaha RR eventually finished the track to Superior and acquired title to the granted lands.
