When railroad tycoon James J. Hill eyed the vast iron ore deposits of northern Minnesota in 1906, he knew his Great Northern Railway was barred from owning the mines directly.
So instead, he and his partners set up a trust, with headquarters in St. Paul, allowing them to own Iron Range property and collect royalties -- until some distant date, 20 years after the last trustee died.
On Monday, Hill's distant date finally arrived. After 109 years in business, the Great Northern Iron Ore Properties Trust officially terminated Monday and its stock stopped trading on the New York Stock Exchange.
The moment provided a reminder of a distant era in Minnesota history, shaped by railroad barons and trust-busting reformers, by the great riches of the Mesabi Range and the hard realities of the industrial age.
"So many of Hill's decisions cast such a long shadow," said Craig Johnson, manager of the James J. Hill House historic site in St. Paul. "It reminds us that he's still that big looming presence in the business and corporate life here in the Twin Cities."
The iron ore trust isn't the best-known venture of a business titan who was nicknamed "the Empire Builder" for his railroad network to the Pacific. But Hill's trust has been quietly lucrative for more than a century.
In a span of 109 years, the trust has collected and distributed more than $500 million in royalties from the 67,000 acres it owned in northern Minnesota. It gets its money by leasing its properties to mining companies and steelmakers; it does no mining itself.
"It is a very unusual trust," Joseph Micallef, its longtime president, said Monday. Now, the trust's small 10-person staff will spend its time winding down its affairs, as the assets pass to an affiliate of oil company ConocoPhillips.
But the changeover remains the subject of a still-unsettled legal fight, mostly about when the new owners take full control. So Micallef isn't comfortable speaking freely about the trust and the Hill family.
Nevertheless, historical information from the trust show that James J. Hill and his sons were interested in the Iron Range's rich resources in the 1890s, then began to acquire its holdings.
But at the dawn of the 20th century, the world began to change for powerful titans like Hill. Reformers led by President Teddy Roosevelt began to rein in corporate power, and Hill lost a big case before the U.S. Supreme Court. By 1906, it became illegal for U.S. railroads to haul commodities that the railroads themselves had produced.
That led Hill and 18 partners to create the Great Northern Iron Ore Properties Trust, which was a separate legal entity from Hill's railroad, although deeply interconnected.
That trust arrangement let Hill and his partners get two bites of the apple -- both as landowners on the Mesabi Range and as rail transport for mountains of iron ore (and later, taconite) destined for ships on Lake Superior.
"Having a spur line that went right up into the Mesabi Range was hugely successful for Hill and the Great Northern," said Johnson, the Hill House manager. "With iron ore, the country was entering the phase of building skyscrapers and things like that."
The trust also included a curious wrinkle: It would terminate 20 years after the death of the last founding partner.
James J. Hill died in 1916, but his trust would run nearly a century longer. The last partner died April 6, 1995, starting the 20-year period that ended Monday.
The trust's holdings include Hibbing's Mahoning mine, which ranks as one of the world's largest open-pit iron ore mines. As of 2014, the Mahoning mine had produced 165 million tons of iron ore and taconite, trust documents say.
While the trust's mines have produced a total of 706 million tons of ore, there's still a lot of taconite left, the trust believes.
In a filing with the Securities and Exchange Commission, it wrote, "Our engineers estimate that the proven and probable ore reserves of magnetic taconite under lease as of Dec. 31, 2013, were equivalent to approximately 352 million tons of pellets."
On its final day of trading, the stock closed at $8.10, up 9 percent.
Johnson believes that Hill's embrace of an iron-ore trust back in 1906 reveals something about a tycoon who was shrewd, aggressive, quick to adapt and always loyal to his adopted home of St. Paul.
"He was a fierce, hard-driving businessman," Johnson said. "But he would always play by the rules. If there were new (and unwelcome) rules, he would certainly get angry and shake his fist. But he wouldn't break the law.
"He would accept what the terms are, then ask, 'So what would be the next best thing?' "
source; twincities.com/
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