Birmingham’s founding full of drama and paradox

One eminent Alabama historian characterized the period leading up to 1871 and the founding of Birmingham as rife with “intrigue and cunning” and “plenty of conniving and double-dealing.”

Another concluded that, in documenting the battle over railroad routes and access to the untapped mineral riches in then-sparsely populated Jefferson County: “Who deceived and double-crossed whom may never be known.”

Alabama NewsCenter is presenting a continuing series marking the 150th birthday of the city of Birmingham.

The stage for Birmingham’s founding was set roughly 500 million years before. That’s when the geological processes began that resulted in the area’s vast deposits of iron ore, coal and limestone – the only place in the world where the three ingredients of iron are found in such close proximity.

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Interest in the profit-making potential of those resources – removing them from the earth, transporting them from mine and quarry to mill, turning them into products for a growing country – emerged in the late 1850s. The Civil War intervened, but in the years that followed, what would become known as the Birmingham Mineral District attracted increasing attention.

James W. Sloss.

For some, the best way of fulfilling those ambitions was by building a new city, the South’s first center of heavy manufacturing. A group of influential Alabama landowners and financiers that included John T. Milner and James W. Sloss is widely recognized as most responsible for shepherding the vision of Birmingham to reality. These were men of Old South sensibilities and sympathies but with a shared understanding of the new economic realities of post-war America. Most, if not all, held slaves prior to the Civil War, and all had supported the Confederacy

Others – especially a group that was determined Chattanooga would become a major rail center and commercial hub – were absolutely opposed to the founding of a rival city to the south, and wanted only to control the mineral riches of Jefferson County. This group was led by John C. Stanton, a carpetbagger from Massachusetts described by one contemporary writer as “a red-headed, hustling rascal.” Stanton was the driving force in developing the Alabama & Chattanooga Railroad, a 295-mile route from Chattanooga to Meridian, Mississippi, running through Jefferson County.

The contest between these two groups became a desperate rivalry. The outcome turned on two questions: Where in Jones Valley would Stanton’s Alabama & Chattanooga intersect with the other railroad being built through Jefferson County, the Alabama South & North, connecting the state capital of Montgomery with the river port of Decatur? And who would own the land around the intersection?

The first shot came from Chattanooga.

Through a series of maneuvers in the summer and early fall of 1868, Stanton managed what amounted to a hostile takeover of the South & North. He engineered the replacement of the rival railroad’s president with his own man, John Whiting, a planter and cotton merchant from Montgomery with close ties to Wall Street financiers backing Stanton’s plan. Whiting promptly set about changing the planned route of the South & North. The plan might have worked, but Whiting died unexpectedly the following year and a vote of the railroad’s shareholders restored the former president, Frank Gilmer, to his post.

John T. Milner.

It also restored responsibility for determining the railroad’s route through Jefferson County to Milner, who had remained under contract with the South & North to oversee the railroad’s construction. Milner recognized early on the area’s economic potential. Sometime after first standing atop Red Mountain in 1856 and seeing what he later called “that beautiful valley … one vast garden as far as the eye could reach,” he became the first to envision a thriving industrial city there. As he worked to make that happen, Milner knew he was navigating treacherous waters.

In the contest with Stanton and his group, Milner and his associates held some significant advantages. Most importantly, the route of the Alabama & Chattanooga was already graded and prepared for the laying of track, leaving little flexibility for altering its planned path through the county. The final decision on where the two railroads would cross was Milner’s.

The battle’s next major move occurred in the spring of 1870, when Milner made what seemed a strange recommendation. He suggested Gilmer approach Stanton about the two rival groups jointly securing options on a 7,000-acre tract along Village Creek. This was the area Milner actually favored as the site of the new city, with its numerous springs and streams that assured an abundant supply of water.

It seems doubtful that Milner expected straightforward dealing from Stanton, whose next move was completely in character. Within weeks, he reneged on his agreement with Gilmer and instead obtained 60-day options on 4,150 acres to the south and east of the 7,000-acre tract. The options were payable at the offices of Josiah Morris & Company, a private bank in Montgomery. Stanton then exercised the little flexibility he had on the route of the Alabama & Chattanooga to assure it would run through that property.

Stanton intended to force Milner’s hand on the site of the railroad crossing and leave Milner and his associates holding the bag on land that would, in effect, be worthless. With no railroad crossing there, there would be no city.

With Stanton now committed, Milner kept his rival off balance by making a great show of surveying several potential crossing sites while wavering publicly on which would be the most advantageous. Meanwhile, he convinced Morris that establishing a new city was the key to unlocking the vast economic potential of the Mineral District. Milner offered the Montgomery banker a position as the largest stockholder in what would be known as the Elyton Land Company, which would direct the city’s development.

Milner suspected all along that Stanton would not have the money to exercise all his options on the 4,150 acres, which proved to be correct. When the options expired, Morris immediately paid $100,000 cash (about $2 million in current dollars) to buy the deeds to the property. He then sold roughly 80% of his new holdings to nine men who became shareholders in the Elyton Land Company when it was organized in December 1870. It was at a shareholder meeting the following month that the name Birmingham, honoring England’s great ironmaking center, was selected for the fledgling city.

“The outcome was full of paradox,” wrote historian David Lewis. “As it ultimately turned out, the site on which Birmingham was built had not been originally selected by the victorious South & North group, but was instead co-opted by them through Milner’s adroit maneuvering. The person who had chosen the place where the new city would rise, by taking out options that he never exercised, was John C. Stanton, who had used every resource at his command to keep it from being born.”

But Stanton did not give up.

In April 1871 – even as construction of the South & North entered Jones Valley and was proceeding toward the crossing Milner selected – the railroad found itself short of money, with insufficient funds to make a scheduled payment on state-backed bonds.

Various appeals were made to Northern financiers without success. The would-be founders began to despair that their vision for Birmingham – for which the primary street grid was already being laid out – would never be realized.

Aware of the situation, Stanton made his final move. He quietly raised the money to acquire most of the South & North’s first mortgage bonds and then demanded the railroad either pay the interest owed or be taken over by Stanton’s new allies.

Birmingham was doomed – or so it seemed.

The city’s salvation came in the person of Sloss. A long-established railroad owner and leading proponent of Alabama’s industrialization, Sloss had followed the drama surrounding the development of Birmingham with great interest. (Among other connections, he was a close friend of Josiah Morris.) Sloss’s Nashville & Decatur was a satellite of the South’s leading rail line, the Louisville & Nashville Railroad (L&N), which planned to connect with the South & North at its terminus in Decatur.

Apprised of the South & North’s plight, Sloss approached L&N President Albert Fink with a proposal: If Fink would make the overdue bond payment on behalf of the South & North, assume all its debts and fund its completion from Birmingham to Decatur, Sloss would lease his railroad to the L&N for 30 years. Seeing a golden opportunity to obtain an effective monopoly on rail traffic from Nashville to Montgomery and get a leg up on competition in the race to open up access to the Gulf of Mexico, Fink agreed.

Fink’s ensuing struggle to convince the L&N board of directors to go along with the proposal – in which Sloss again played a pivotal role in resolving – was itself a matter of considerable drama. But in the end, the proposal was approved, the South & North rescued from ruin, and Birmingham – where the first lots would be sold on June 1, 1871 – saved.

Slag run and filling slag pots, Sloss Furnaces, Birmingham, c. 1906. (Detroit Publishing Co., Library of Congress, Prints and Photographs Division)

In the aftermath, Sloss moved to Birmingham, where he became one of the city’s most revered citizens. He was a founder, director or investor in numerous early ventures, most notably the Sloss Furnaces, which began producing iron in 1882 at its facility on the outskirts of downtown Birmingham, and which is preserved today as a National Historic Landmark.

As for Stanton, his Alabama & Chattanooga line was bankrupt by the end of 1871. Returning to Chattanooga, he staved off creditors while trying to recover his fortune through a series of business schemes, none of which quite worked. He ran for Chattanooga mayor in 1879 and lost badly, leaving the city the following year under a cloud of lawsuits.

In the end, things didn’t turn out too badly for Stanton. He moved to New York City, where he regained a measure of wealth and lived comfortably until his death in 1901 at the age of 76.

By then, Birmingham – a city he had hoped to quash before its birth – was here to stay.

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