The Story of the Menominee River Sugar Company 1903-1955

Menominee, Michigan, situated far from the world's				All the members of the board of directors and
financial centers a hundred years ago, much as it				roster of officers apart from Bay City resident,
is today, nevertheless placed itself directly in the				Benjamin Boutell, listed Menominee as their home
middle of one of the hottest business booms of				of record. Menominee residents made up 74% of
the early twentieth century - sugar. The small				the shareholders. Together, they controlled 53%
community that dared to plant a footprint in world				of the shares. In addition to Stephenson, other
commerce occupies a slivered point of land that				major shareholders who also accepted positions
dips into Lake Michigan at a point so close in				as either officers or directors were: William O.
proximity to Wisconsin that had a cartographer's				Carpenter who invested $55,000 and served the
finger twitched at a crucial moment, Menominee				sugar company variously as president and
would be in Wisconsin instead of Michigan.				vice-president. Gustave A. Blesch invested $15,000
Menominee is bordered on the east by Green				and served as treasurer. John Henes, a brewery
Bay, an arm of Lake Michigan, and on the				owner, invested $25,000 and served as a director.
south-west by the Menominee River. In 1903,				Augustus Spies was the second largest investor
many investors in the beet sugar industry had a				after Stephenson and the Sugar Trust. He, too,
timber background and had thus come to believe				served as a director.
that the same rivers that had once delivered logs				Spies provide an excellent example of the hardy
to sawmills in abundance could also serve the				pioneering spirit that prevailed in Menominee. He
needs of a beet sugar factory where massive				was a native of the grand duchy of
volumes of water are used for fluming beets into				Hessen-Darmstadt, Germany where fertile soils
the factory, washing them and then diffusing the				and a mild climate allowed the production of grain
sugar from them. A sugar factory could easily put				and wine. He participated in the founding of the
three million gallons of water to use every				Stephenson National Bank in partnership with
twenty-four hours. Barges can carry sugarbeets				future U.S. Congressman Samuel M. Stephenson
from the farm fields and freighters can carry				and Samuel's brother, future U.S. Senator, Isaac
products to market. The presence of the				Stephenson. In addition, he owned the Spies
Menominee River convinced investors that				Lumber Company and several large tracts of
Menominee could compete with the nation's sugar				forest; he was an investor in the First National
producers despite negative comments from				Bank of Menominee, the Marinette and Menominee
naysayers who said Menominee was too far				Paper Company and president of the Menominee
north to successfully grow sugarbeets.				Light, Railroad and Power Company. When the
The naysayers had a point. Menominee, Michigan is				fledgling sugar company got under way, he
an unlikely place to construct a beet sugar				stepped forward with $75,000 ($1.5 million in
factory. Situated at the western end of Michigan's				current dollars).
Upper Peninsula, the growing season is about				Support from Menominee's wealthy class, who
forty days shorter than the prime beet growing				also shared distinctions of making good business
regions in the state's Lower Peninsula. The short				decisions and rising on their own merit rather than
season can prevent the ripening of beets which				inherited wealth, was so great that there was no
will then lessen sugar content of immature beets ill				need to solicit funds from the public at large. With
prepared for the stress of the milling process.				its shares over-subscribed by $35,000, the
Severe frosts in early spring are not unusual and				Menominee River Sugar Company was in the
are almost always fatal to a crop of young beets.				enviable position of having adequate capital for its
Frosts can come early in the fall, too, which can				venture. Not only was it possessed of sufficient
make it impossible to harvest a crop. A farmer				capital but also it enjoyed the added benefit of
stood to lose his entire crop either early in the				the experience of Benjamin Boutell and
growing season or near the time of harvest after				representatives of the Sugar Trust. Menominee
he had invested heavily in bringing the sugarbeet				would not want for technical or business
crop to term. Investors, however, in Menominee,				expertise.
as in many of Michigan's cities, tended to discount				Gustave Blesch, like Augustus Spies, owed his
input from farmers before building a factory and				success to the inherited qualities of hard work,
would frequently interpret exaggerated				honesty and the respect of his peers. He would
enthusiasm from a handful of growers as				become the sugar company's first treasurer. He
representing the broader farming community.				was born in Green Bay, Wisconsin in 1859, the
Quite often, as in Menominee's case, as it would				son of Francis Blesch, a native of Germany and
turn out, the handful did not represent the whole.				Antoinette Schneider, a native of Belgium.
Official recognition by the United States				Gustave became an office boy in the Kellogg
Department of Agriculture in 1898 of the				National Bank of Green Bay, rising to teller by the
importance of the sugarbeet industry sparked the				age of twenty. Five years later, he moved to
construction of beet sugar factories across the				Menominee to help establish the First National
nation. One year earlier the nation could boast only				Bank of Menominee where he began as cashier
ten beet sugar factories, four of which were in				before becoming the bank's president. He became
California, one in Utah, two in Nebraska and three				president of the Menominee Brick Company,
in New York. The construction of seven				vice-president of the Menominee-Marinette Light
sugarbeet factories in 1898 brought into focus for				& Traction Company, and treasurer of the
the first time the stirrings of a rush not unlike the				Peninsula Land Company.
dot-com boom that blossomed nearly one				In January, 1903, the newly elected board of
hundred years later. The idea that sugar produced				directors approved an $800,000 (nearly $19 million
from sugarbeets could compete with sugar				in current era dollars) construction contract for a
produced from sugarcane expanded into a				Kilby designed and built factory that would slice
full-fledged boom by 1900 when the nationwide				1,000 tons of beets per day. Of the 48 beet
count of sugarbeet factories stood at thirty-two				sugar factories in operation in the United States in
in eleven states.				1903, only two were larger than Menominee's new
Nowhere was the blaze hotter than in Michigan				factory, one in Salinas, California and another in
where nine factories followed the successful start				Fort Collins, Colorado.
up of a factory in Essexville, Michigan, a suburb of				The average sugar factory in Michigan in 1903
Bay City. A burst of cyclonic enthusiasm caused a				could slice six hundred tons of beets in a
mad scramble when investors, constructors,				twenty-four hour period. Four thousand acres of
bankers, and farmers combined energies and skills				beets would easily supply a season's factory run.
to bring to life eight factories in a single year!				Had the investors surveyed the farmers first,
They were in Holland, Kalamazoo, Rochester,				surely they would have been advised to build a
Benton Harbor, Alma, West Bay City, Caro, and a				smaller factory, and perhaps would have been
second factory in Essexville. Despite the paucity				persuaded to build none. Farmers delivered beets
of factory constructors and the engineers to				from approximately 1,500 acres, well short of the
operate them, fourteen additional factories rose				9,000 acres the investment demanded.
on the outskirts of Michigan towns during the next				The Menominee factory's first factory run
six years, one of which appeared in Menominee in				(referred to as a "campaign" in the sugar industry)
1903.				ended quickly, having received only 14,263 tons,
In Menominee, a group of investors undeterred				enough for a production run of fourteen days for
by the natural disadvantages and buoyed by				a factory the investors planned to operate at
encouragement from influential investors and				least one hundred days. However, the farmers
knowledgeable experts, set a plan in motion to				had submitted beets containing the highest sugar
maintain the economic viability of their city after				reported of any company during its first
the approaching demise of the lumber industry,				campaign, 15.04 percent - about 20 percent more
which had until then provided the underpinnings of				than average and enough to allow for a small
Menominee's economy. The plan included the				profit from a meager beet supply. Like nearly all
design of one of the largest and most modern				the factories, records that would inform us of
sugarbeet factories to appear in America up to				profit, if any, earned during that first campaign,
that time.				did not survive the passage of time. However, it
As the lumber era petered out at the beginning of				would be reasonable to estimate, based on the
the 20th century, railroads that had come into				known cost of supplies of coal, coke, limestone
their own because of timber, sought new sources				and the cost of labor, that a profit of $36,000
of revenue. Principal among them was the Detroit				was achievable, especially under a management
and Mackinac Railroad whose land agent, Charles				style that paid close attention to expenditures and
M. Garrison, collected and distributed information				especially in light of the very high percentage of
about the potential of the sugarbeet industry.				sugar in the beets.
While Garrison spread word among Detroit's				The second campaign was better with enough
financiers about prospective profits in sugarbeets,				beets for a full month, still well short of a supply
communities affected by the decline of lumber				needed to generate profits enough to justify the
looked to area resources for ways of replenishing				investment. By 1911, the local supply reached a
wealth. They had plenty to work with. The state				level that allowed steady profits but was
was crisscrossed with rail lines and rivers and				insufficient to encourage expansion, a condition
some left over cash from the lumber era. With				that persisted until 1926 when grower apathy fell
Garrison leading the way, investors perked up.				to a level that required closing the factory until
Communities eager to find a quick replacement				1933 when it reopened for a final run of twenty
for lumber hastened to attend meetings				years during which the factory lagged behind the
sponsored by Garrison and quicker yet to bring				industry in technology and growth. Year in and
their towns into the fold. All that was needed was				year out, because of an inadequate supply of
to persuade the farmers to grow the beets. That				beets, mostly grown in Wisconsin, the underutilized
is where the Michigan Agricultural College (Now				factory ended its campaign weeks earlier than
Michigan State University) stepped in.				was needed to produce healthy profits which then
Upper Peninsula farmers, encouraged by Michigan				could have been reinvested in the factory.
Agricultural College to plant sugarbeet test plots,				Menominee investors learned, as did many other
received an even greater shot in the arm by the				sugar factory investors, that the mantra, "build it
visit of Secretary of Agriculture James Wilson, in				and they will come" fell on deaf ears among
1902. He expounded the advantages of				farmers who often displayed a better
sugarbeets and discouraged the notion that the				understanding of sugar economics than did
Upper Peninsula's climate wasn't up to the task of				investors.
producing profitable crops. Wilson served in three				The passage of time brought neither harm nor
presidential cabinets, McKinley, Roosevelt, and				good to the Menominee factory as it was unable
Taft, serving longer (1897-1913) than any other				to expand or modernize. It settled into the
cabinet official. He encouraged modern agriculture				process of graceful aging. Profits awaiting
methods, including transportation and education as				opportunity gradually accumulated thanks to the
they applied to agriculture. His word carried a lot				company's penurious management style and a
of weight. When he spoke of sugarbeets, some				dedicated cadre of farmers.
farmers listened and when his department				George W. McCormick, the company's first
avowed that the cold northern temperatures				manager, inaugurated a careful management style
would not inhibit the development of the industry				that went a long way toward keeping the
in their neighborhood, investors, farmers, and				company profitable despite annual shortfalls in the
manufacturers lined up to begin the industry in				beet supply. He managed the company during its
Menominee.				first thirty-two years of operation, beginning when
Optimism rose to new heights when the United				he was twenty-four years of age. He met
States Department of Agriculture (USDA)				Benjamin Boutell in Bay City when he moved
announced favorable results of the sugarbeet plot				there to take a job as a district manager for
tests. The Sugar Beet News of December 15,				Travelers Insurance Company. Boutell thought the
1903, reported test results from beets delivered				young man belonged in the rapidly developing
by approximately 140 farmers. The test runs				sugar industry and encouraged him to help in the
revealed 15.6 to 19.9 % sugar, which meant a				establishment of a sugar factory in Wallaceburg,
cash value to the farmers per acre of from $5.70				Ontario. After completing the assignment with
to $7.13 per ton ($135-$169 inflation adjusted to				success, Boutell recommended him for the
the current period). At those projected prices, no				manager's job in Menominee.
crop in human history had held the potential for				Menominee was the most difficult place in the
creating such a high return from so few acres.				United States to process sugarbeets. The low
In the Lower Peninsula, a farmer with above				temperatures took a heavy toll on workers,
average ability who placed fifteen acres in				machinery and beets that usually went through
sugarbeets could earn more than $800 and if his				the slicing machines like boulders, damaging
family provided the bulk of the labor, the net				equipment that robbed the factory of slender
profit would more than take care of a family's				resources. It was difficult to find replacement
needs for a year, which, including food, was less				parts because of the distance separating
than $800. After adding revenue from crops in				Menominee from suppliers and from Lower
rotation and revenues from milk, eggs, and				Peninsula sugar factories where it was common
poultry, the farm family's standard of living				for factory managers to lend spare parts to one
advanced from a subsistence level to one that				another.
compared favorably to those who held				The company's diligent attention to cost control
mid-management positions in industry. USDA				paid off in 1924 when sugar factories located in
figures supported belief that Upper Peninsula beets				Green Bay and Menominee Falls, Wisconsin went
would exceed by two per cent the average for				on the market. Menominee River Sugar Company
all the other 18 sugar beet factories in the Lower				purchased both and then invested significant sums
Peninsula.				in restoring the Menominee Falls factory that had
If the tests proved reliable indicators, Menominee				been shut for three years immediately preceding
region beets were worth up to $10 more an acre				its sale.
than Lower Peninsula beets, assuring an income of				The renovated Menominee Falls factory combined
nearly $1,000 per year just from sugarbeets.				with the Green Bay and Menominee, Michigan
Although enthusiasm was on the upturn,				factories created more capacity than was needed
something more was needed to seal the deal. To				for the available acreage. One of the factories
instill confidence in prospective investors that				would have to close. Menominee won the noose
technical expertise lay near at hand, Benjamin				after the accountants counted up the freight
Boutell, who won fame as both a tugboat captain				costs for hauling beets to each factory. The
and as a captain of industry, arrived in Menominee				Menominee factory remained closed until 1933
from his Bay City, Michigan headquarters for the				when Michigan's farmers relented and agreed to
single purpose of conveying interested investors				return to sugarbeets, a decision that came too
to Bay County where they could see groomed				late to save the hides of the sugar company's
beet fields and efficient factories spinning out				owners who had lost the company to defaulted
white crystalline sugar. Eleven prospective				bonds three years earlier.
investors accompanied Boutell to Bay City where				Disruptions in Europe beginning in the early part of
convincing evidence lay at hand. Four beet sugar				the 1930s brought a new name to Michigan's beet
factories, more than in any other city in the				sugar fields and corporate offices - Flegenheimer.
United States, had been constructed in that city's				Albert Flegenheimer was the son of Samuel
environs. Bay City virtually hummed with				Flegenheimer who had immigrated to the United
economic activity because of the presence of				States in either 1864 or 1866 and became a
sugar factories. Mansions peopled by former				naturalized citizen in 1873. The next year,
lumber barons who had transformed themselves				however, he returned to Germany, settling in
into sugar barons, lined the city's prestigious				Wurttemberg. He lived out his life there, dying in
Center Avenue.				1929 at the age of 81. His brief sojourn in the
Boutell announced he would become one of the				United States and his U.S. citizenship status,
investors, providing the other investors had no				however, would one day save his descendants
objection to having a factory designed and				from German death camps.
installed by Joseph Kilby who was according to				In February 1939, Albert Flegenheimer carried his
Boutell, the finest constructor of beet sugar				family to the safety of Canada and then to the
factories in the United States. Many others agreed				U.S. claiming nationality as the son of a naturalized
with Boutell's assessment; Kilby built nine of the				citizen. He planned to raise his family and devote
eventual twenty-four factories built in Michigan.				his time to the sugar industry in both the United
Local investors lined up behind Boutell to organize				States and Canada. His plans met with
the Menominee River Sugar Company. A half				considerable success and by 1954, he controlled
dozen important backers came forward, each of				the sugar factory in Menominee and the one in
whom subscribed to more than $25,000 in stock				Green Bay, Wisconsin.
of the Menominee River Sugar Company.				Despite Albert Flegenheimer's efforts, a lack of
Heading up the list of local shareholders was				interest on the part of farmers kept the factory
Samuel M. Stephenson, a former lumber				small and outdated. It struggled year by year until
manufacturer and native of New Brunswick,				finally in 1955 with its equipment exhausted, its
Canada who had made a home for himself, his				buildings in tattered repair and its farmers pursuing
wife, Jennie and their four daughters and one son,				other crops, Menominee River Sugar Company,
in Menominee. He was then seventy-one years of				built on hopes and dreams and operated with
age but in no mood for retirement. Following a				fortitude and persistence for more than a
successful career in lumber and banking, he				half-century, closed its doors forever.
served three successive terms in Congress				Sources:
(Michigan's 11th District 1889-93 and the 12th				GUTLEBEN, Dan, The Sugar Tramp-1954-
District 1893-97). He invested $100,000 ($2 million				Michigan, Printed by: Bay City Duplicating Co, San
by modern standards) in the beet sugar factory,				Francisco, 1954
taking heart in not only favorable test plot results				1962 TWIN CITY COMMUNITY RESOURCES
and the enthusiasm of his neighbors but also				WORKSHOP, section entitled Famous Leaders
interest shown by the American Sugar Refining				Who Helped Build Menominee, prepared by Irene
Corporation, generally known by its then popular				Swain, Dr. Leo J. Alilunas, Director.
sobriquet, the Sugar Trust. Some years later the				HENLEY, ROBERT L., Sweet Success . . .The
Sugar Trust would fall into disfavor as a result of				Story of Michigan's Beet Sugar Industry 1898 -
charges of unfair business practices, but in 1903, it				1974, Michigan Historical Center, Department of
had the confidence of the general public and				History, Arts and Libraries
investors alike and controlled the manufacture and				INFLATION ADJUSTMENTS: The pre-1975 data
sale of 98% of sugar consumed in the United				are the Consumer Price Index statistics from
States. Trust Executives, Arthur Donner and				Historical Statistics of the United States (USGPO,
Charles R. Heike, invested $300,000 to acquire				1975). All data since then are from the annual
36% of Menominee River Sugar Company's				Statistical Abstracts of the United States.
stock.

Rpma

The Story of the Menominee River Sugar Company 1903-1955