Sunday, January 1, 2012

The Story of the Menominee River Sugar business 1903-1955

The Story of the Menominee River Sugar business 1903-1955

Menominee, Michigan, situated far from the world's financial centers a hundred years ago, much as it is today, nevertheless placed itself directly in the middle of one of the hottest company booms of the early twentieth century - sugar. The small society that dared to plant a footprint in world commerce occupies a slivered point of land that dips into Lake Michigan at a point so close in presence to Wisconsin that had a cartographer's finger twitched at a crucial moment, Menominee would be in Wisconsin instead of Michigan.

Menominee is bordered on the east by Green Bay, an arm of Lake Michigan, and on the south-west by the Menominee River. In 1903, many investors in the beet sugar commerce had a timber background and had thus come to believe that the same rivers that had once delivered logs to sawmills in plentifulness could also serve the needs of a beet sugar facility where huge volumes of water are used for fluming beets into the factory, washing them and then diffusing the sugar from them. A sugar facility could nothing else but put three million gallons of water to use every twenty-four hours. Barges can carry sugarbeets from the farm fields and freighters can carry products to market. The presence of the Menominee River convinced investors that Menominee could compete with the nation's sugar producers despite negative comments from naysayers who said Menominee was too far north to successfully grow sugarbeets.

The naysayers had a point. Menominee, Michigan is an unlikely place to organize a beet sugar factory. Situated at the western end of Michigan's Upper Peninsula, the growing season is about forty days shorter than the prime beet growing regions in the state's Lower Peninsula. The short season can forestall the ripening of beets which will then lessen sugar content of teenage beets ill prepared for the stress of the grinding process. Severe frosts in early spring are not unusual and are approximately all the time fatal to a crop of young beets. Frosts can come early in the fall, too, which can make it impossible to harvest a crop. A farmer stood to lose his entire crop whether early in the growing season or near the time of harvest after he had invested heavily in bringing the sugarbeet crop to term. Investors, however, in Menominee, as in many of Michigan's cities, tended to allowance input from farmers before building a facility and would frequently elucidate exaggerated enthusiasm from a handful of growers as representing the broader farming community. Quite often, as in Menominee's case, as it would turn out, the handful did not describe the whole.

Official recognition by the United States group of Agriculture in 1898 of the importance of the sugarbeet commerce sparked the building of beet sugar factories across the nation. One year earlier the nation could boast only ten beet sugar factories, four of which were in California, one in Utah, two in Nebraska and three in New York. The building of seven sugarbeet factories in 1898 brought into focus for the first time the stirrings of a rush not unlike the dot-com boom that blossomed nearly one hundred years later. The idea that sugar produced from sugarbeets could compete with sugar produced from sugarcane expanded into a full-fledged boom by 1900 when the nationwide count of sugarbeet factories stood at thirty-two in eleven states.

Nowhere was the blaze hotter than in Michigan where nine factories followed the victorious start up of a facility in Essexville, Michigan, a suburb of Bay City. A burst of cyclonic enthusiasm caused a mad scramble when investors, constructors, bankers, and farmers combined energies and skills to bring to life eight factories in a single year! They were in Holland, Kalamazoo, Rochester, Benton Harbor, Alma, West Bay City, Caro, and a second facility in Essexville. Despite the paucity of facility constructors and the engineers to operate them, fourteen added factories rose on the outskirts of Michigan towns during the next six years, one of which appeared in Menominee in 1903.

In Menominee, a group of investors undeterred by the natural disadvantages and buoyed by encouragement from influential investors and knowledgeable experts, set a plan in request for retrial to vocalize the economic viability of their city after the approaching demise of the lumber industry, which had until then provided the underpinnings of Menominee's economy. The plan included the organize of one of the largest and most modern sugarbeet factories to appear in America up to that time.

As the lumber era petered out at the beginning of the 20th century, railroads that had come into their own because of timber, sought new sources of revenue. Indispensable among them was the Detroit and Mackinac hasten whose land agent, Charles M. Garrison, collected and distributed information about the potential of the sugarbeet industry. While Garrison spread word among Detroit's financiers about prospective profits in sugarbeets, communities affected by the decline of lumber looked to area resources for ways of replenishing wealth. They had plentifulness to work with. The state was crisscrossed with rail lines and rivers and some left over cash from the lumber era. With Garrison prominent the way, investors perked up. Communities eager to find a quick change for lumber hastened to attend meetings sponsored by Garrison and quicker yet to bring their towns into the fold. All that was needed was to persuade the farmers to grow the beets. That is where the Michigan Agricultural College (Now Michigan State University) stepped in.

Upper Peninsula farmers, encouraged by Michigan Agricultural College to plant sugarbeet test plots, received an even greater shot in the arm by the visit of Secretary of Agriculture James Wilson, in 1902. He expounded the advantages of sugarbeets and discouraged the plan that the Upper Peninsula's atmosphere wasn't up to the task of producing profitable crops. Wilson served in three presidential cabinets, McKinley, Roosevelt, and Taft, serving longer (1897-1913) than any other cabinet official. He encouraged modern agriculture methods, including transportation and instruction as they applied to agriculture. His word carried a lot of weight. When he spoke of sugarbeets, some farmers listened and when his group avowed that the cold northern temperatures would not inhibit the development of the commerce in their neighborhood, investors, farmers, and manufacturers lined up to begin the commerce in Menominee.

Optimism rose to new heights when the United States group of Agriculture (Usda) announced suitable results of the sugarbeet plot tests. The Sugar Beet News of December 15, 1903, reported test results from beets delivered by approximately 140 farmers. The test runs revealed 15.6 to 19.9 % sugar, which meant a cash value to the farmers per acre of from .70 to .13 per ton (5-9 inflation adjusted to the current period). At those projected prices, no crop in human history had held the potential for creating such a high return from so few acres.

In the Lower Peninsula, a farmer with above mean quality who placed fifteen acres in sugarbeets could earn more than 0 and if his family provided the bulk of the labor, the net behalf would more than take care of a family's needs for a year, which, including food, was less than 0. After adding income from crops in rotation and revenues from milk, eggs, and poultry, the farm family's thorough of living industrialized from a subsistence level to one that compared comfortably to those who held mid-management positions in industry. Usda figures supported belief that Upper Peninsula beets would exceed by two per cent the mean for all the other 18 sugar beet factories in the Lower Peninsula.

If the tests proved trustworthy indicators, Menominee region beets were worth up to more an acre than Lower Peninsula beets, assuring an income of nearly ,000 per year just from sugarbeets.

Although enthusiasm was on the upturn, something more was needed to seal the deal. To instill belief in prospective investors that technical expertise lay near at hand, Benjamin Boutell, who won fame as both a tugboat captain and as a captain of industry, arrived in Menominee from his Bay City, Michigan headquarters for the single purpose of conveying interested investors to Bay County where they could see groomed beet fields and effective factories spinning out white crystalline sugar. Eleven prospective investors accompanied Boutell to Bay City where convincing evidence lay at hand. Four beet sugar factories, more than in any other city in the United States, had been constructed in that city's environs. Bay City virtually hummed with economic operation because of the presence of sugar factories. Mansions peopled by former lumber barons who had transformed themselves into sugar barons, lined the city's prestigious town Avenue.

Boutell announced he would come to be one of the investors, providing the other investors had no objection to having a facility designed and installed by Joseph Kilby who was agreeing to Boutell, the finest manufacturer of beet sugar factories in the United States. Many others agreed with Boutell's assessment; Kilby built nine of the eventual twenty-four factories built in Michigan. Local investors lined up behind Boutell to organize the Menominee River Sugar Company. A half dozen prominent backers came forward, each of whom subscribed to more than ,000 in stock of the Menominee River Sugar Company.

Heading up the list of local shareholders was Samuel M. Stephenson, a former lumber manufacturer and native of New Brunswick, Canada who had made a home for himself, his wife, Jennie and their four daughters and one son, in Menominee. He was then seventy-one years of age but in no mood for retirement. Following a victorious vocation in lumber and banking, he served three successive terms in Congress (Michigan's 11th District 1889-93 and the 12th District 1893-97). He invested 0,000 ( million by modern standards) in the beet sugar factory, taking heart in not only suitable test plot results and the enthusiasm of his neighbors but also interest shown by the American Sugar Refining Corporation, commonly known by its then favorite sobriquet, the Sugar Trust. Some years later the Sugar Trust would fall into disfavor as a result of charges of unfair company practices, but in 1903, it had the belief of the general public and investors alike and controlled the organize and sale of 98% of sugar consumed in the United States. Trust Executives, Arthur Donner and Charles R. Heike, invested 0,000 to secure 36% of Menominee River Sugar Company's stock.

All the members of the board of directors and roster of officers apart from Bay City resident, Benjamin Boutell, listed Menominee as their home of record. Menominee residents made up 74% of the shareholders. Together, they controlled 53% of the shares. In increasing to Stephenson, other major shareholders who also thorough positions as whether officers or directors were: William O. Carpenter who invested ,000 and served the sugar company variously as president and vice-president. Gustave A. Blesch invested ,000 and served as treasurer. John Henes, a brewery owner, invested ,000 and served as a director. Augustus Spies was the second largest investor after Stephenson and the Sugar Trust. He, too, served as a director.

Spies furnish an excellent example of the hardy pioneering spirit that prevailed in Menominee. He was a native of the grand duchy of Hessen-Darmstadt, Germany where fertile soils and a mild atmosphere allowed the output of grain and wine. He participated in the founding of the Stephenson National Bank in partnership with future U.S. Congressman Samuel M. Stephenson and Samuel's brother, future U.S. Senator, Isaac Stephenson. In addition, he owned the Spies Lumber company and several large tracts of forest; he was an investor in the First National Bank of Menominee, the Marinette and Menominee Paper company and president of the Menominee Light, hasten and Power Company. When the fledgling sugar company got under way, he stepped send with ,000 (.5 million in current dollars).

Support from Menominee's wealthy class, who also shared distinctions of development good company decisions and rising on their own merit rather than inherited wealth, was so great that there was no need to solicit funds from the public at large. With its shares over-subscribed by ,000, the Menominee River Sugar company was in the enviable position of having adequate capital for its venture. Not only was it possessed of adequate capital but also it enjoyed the added advantage of the experience of Benjamin Boutell and representatives of the Sugar Trust. Menominee would not want for technical or company expertise.

Gustave Blesch, like Augustus Spies, owed his success to the inherited qualities of hard work, honesty and the respect of his peers. He would come to be the sugar company's first treasurer. He was born in Green Bay, Wisconsin in 1859, the son of Francis Blesch, a native of Germany and Antoinette Schneider, a native of Belgium. Gustave became an office boy in the Kellogg National Bank of Green Bay, rising to teller by the age of twenty. Five years later, he moved to Menominee to help organize the First National Bank of Menominee where he began as cashier before becoming the bank's president. He became president of the Menominee Brick Company, vice-president of the Menominee-Marinette Light & Traction Company, and treasurer of the Peninsula Land Company.

In January, 1903, the newly elected board of directors approved an 0,000 (nearly million in current era dollars) building contract for a Kilby designed and built facility that would slice 1,000 tons of beets per day. Of the 48 beet sugar factories in operation in the United States in 1903, only two were larger than Menominee's new factory, one in Salinas, California and someone else in Fort Collins, Colorado.

The mean sugar facility in Michigan in 1903 could slice six hundred tons of beets in a twenty-four hour period. Four thousand acres of beets would nothing else but furnish a season's facility run. Had the investors surveyed the farmers first, nothing else but they would have been advised to build a smaller factory, and perhaps would have been persuaded to build none. Farmers delivered beets from approximately 1,500 acres, well short of the 9,000 acres the venture demanded.

The Menominee factory's first facility run (referred to as a "campaign" in the sugar industry) ended quickly, having received only 14,263 tons, adequate for a output run of fourteen days for a facility the investors planned to operate at least one hundred days. However, the farmers had submitted beets containing the top sugar reported of any company during its first campaign, 15.04 percent - about 20 percent more than mean and adequate to allow for a small behalf from a meager beet supply. Like nearly all the factories, records that would advise us of profit, if any, earned during that first campaign, did not survive the duct of time. However, it would be uncostly to estimate, based on the known cost of supplies of coal, coke, limestone and the cost of labor, that a behalf of ,000 was achievable, especially under a administration style that paid close concentration to expenditures and especially in light of the very high ration of sugar in the beets.

The second campaign was good with adequate beets for a full month, still well short of a furnish needed to originate profits adequate to elucidate the investment. By 1911, the local furnish reached a level that allowed steady profits but was insufficient to encourage expansion, a condition that persisted until 1926 when grower apathy fell to a level that required end the facility until 1933 when it reopened for a final run of twenty years during which the facility lagged behind the commerce in technology and growth. Year in and year out, because of an inadequate furnish of beets, mostly grown in Wisconsin, the underutilized facility ended its campaign weeks earlier than was needed to produce salutary profits which then could have been reinvested in the factory. Menominee investors learned, as did many other sugar facility investors, that the mantra, "build it and they will come" fell on deaf ears among farmers who often displayed a good understanding of sugar economics than did investors.

The duct of time brought neither harm nor good to the Menominee facility as it was unable to improve or modernize. It placed into the process of graceful aging. Profits awaiting occasion gradually accumulated thanks to the company's penurious administration style and a dedicated cadre of farmers.

George W. McCormick, the company's first manager, inaugurated a specific administration style that went a long way toward retention the company profitable despite yearly shortfalls in the beet supply. He managed the company during its first thirty-two years of operation, beginning when he was twenty-four years of age. He met Benjamin Boutell in Bay City when he moved there to take a job as a district employer for Travelers guarnatee Company. Boutell plan the young man belonged in the rapidly developing sugar commerce and encouraged him to help in the preparing of a sugar facility in Wallaceburg, Ontario. After completing the assignment with success, Boutell recommended him for the manager's job in Menominee.

Menominee was the most difficult place in the United States to process sugarbeets. The low temperatures took a heavy toll on workers, machinery and beets that commonly went straight through the slicing machines like boulders, damaging tool that robbed the facility of slender resources. It was difficult to find change parts because of the length separating Menominee from suppliers and from Lower Peninsula sugar factories where it was tasteless for facility managers to lend spare parts to one another.

The company's diligent concentration to cost operate paid off in 1924 when sugar factories placed in Green Bay and Menominee Falls, Wisconsin went on the market. Menominee River Sugar company purchased both and then invested Indispensable sums in restoring the Menominee Falls facility that had been shut for three years immediately preceding its sale.

The renovated Menominee Falls facility combined with the Green Bay and Menominee, Michigan factories created more capacity than was needed for the ready acreage. One of the factories would have to close. Menominee won the noose after the accountants counted up the freight costs for hauling beets to each factory. The Menominee facility remained fulfilled, until 1933 when Michigan's farmers relented and agreed to return to sugarbeets, a decision that came too late to save the hides of the sugar company's owners who had lost the company to defaulted bonds three years earlier.

Disruptions in Europe beginning in the early part of the 1930s brought a new name to Michigan's beet sugar fields and corporate offices - Flegenheimer. Albert Flegenheimer was the son of Samuel Flegenheimer who had immigrated to the United States in whether 1864 or 1866 and became a naturalized habitancy in 1873. The next year, however, he returned to Germany, settling in Wurttemberg. He lived out his life there, dying in 1929 at the age of 81. His brief sojourn in the United States and his U.S. Citizenship status, however, would one day save his descendants from German death camps.

In February 1939, Albert Flegenheimer carried his family to the protection of Canada and then to the U.S. Claiming nationality as the son of a naturalized citizen. He planned to raise his family and devote his time to the sugar commerce in both the United States and Canada. His plans met with Indispensable success and by 1954, he controlled the sugar facility in Menominee and the one in Green Bay, Wisconsin.

Despite Albert Flegenheimer's efforts, a lack of interest on the part of farmers kept the facility small and outdated. It struggled year by year until ultimately in 1955 with its tool exhausted, its buildings in tattered fix and its farmers pursuing other crops, Menominee River Sugar Company, built on hopes and dreams and operated with fortitude and persistence for more than a half-century, fulfilled, its doors forever.

Sources:

Gutleben, Dan, The Sugar Tramp-1954- Michigan, Printed by: Bay City Duplicating Co, San Francisco, 1954

1962 Twin City society Resources Workshop, section entitled predominant Leaders Who Helped Build Menominee, prepared by Irene Swain, Dr. Leo J. Alilunas, Director.

Henley, Robert L., Sweet Success . . .The Story of Michigan's Beet Sugar commerce 1898 - 1974, Michigan Historical Center, group of History, Arts and Libraries

Inflation Adjustments: The pre-1975 data are the consumer Price Index statistics from Historical Statistics of the United States (Usgpo, 1975). All data since then are from the yearly Statistical Abstracts of the United States. Recorded at http://www.westegg.com/inflation

Michigan yearly Reports, Michigan Archives, Lansing, Michigan
©2009 Thomas Mahar

About the Author:
Thomas Mahar served as executive Vice President of Monitor Sugar company in the middle of 1984 and 1999 and as President of Gala Food Processing, a sugar packaging company, from 1993-1998. He retired in 1999 and now devotes his free time to writing about the history of the sugar industry. He authored, Sweet Energy, The Story of Monitor Sugar company in 2001.

The Story of the Menominee River Sugar business 1903-1955

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