The Era of E.W. Backus

Previous: The Logging Camp Era

Edward W. Backus was the key man in the development of Koochiching County and no history of the area would be complete without the story of his life and a review of events that took place during the 30 years he was active in these parts. Though his vast empire of paper and lumber mills, power plants and woodlands collapsed during the Great Depression, he is still remembered as the founder of enterprises that survived his own downfall. The forest products industries that have been the mainstay of Koochiching's economy for 75 years — and are continuing as such — are deeply rooted in the accomplishments of E.W. Backus. Present-day Koochiching was still a part of Itasca County — sparsely settled and largely undeveloped — when he first came on the scene in the late 1890s. He was a successful Minneapolis lumberman, energetic, influential and already wealthy at the age of 40. He had been watching the gradual decline of the Twin Cities sawmill industry as supplies of accessible timber dwindled. What he needed was a new operating area, a new field for pursuing his lofty goals.

Backus found his new field in the Minnesota-Ontario boundary region. Here, he knew, was an abundance of timber for the lumber and paper mills he proposed to build. Here, too, was an enormous supply of hydro-electric power waiting to be harnessed at Koochiching Falls on Rainy River and at other sites.

First, the background of this extraordinary person: Born at Jamestown, New York, December 1, 1860, Edward Wellington Backus grew up at Red Wing, Minnesota, where his parents moved when he was 2 years old. His father, Abel Backus, was a stone mason and farmer of modest means.

His education began in a country school and continued at the University of Minnesota, where he enrolled at age 17. Determined to pay his own way, he worked at University Farm in St. Paul, accepted part-time jobs wherever he found them and took 1 winter off from his classes to teach in a rural school. In 4 years of intermittent work and study he thus managed to complete 3 years of his University course.

In the spring of 1882 he was down to his last $5 bill — so the story goes — and he felt forced to make an important decision. He would have to find steady, more remunerative employment; perhaps in a year or 2 he could save enough to finish his University course.

Business Decision
What business should he enter? He found himself with 2 choices: lumbering and flour milling. These were the main industries of the Twin Cities at the time and the young man was interested in both. It is related that he then flipped a coin. The toss favored lumbering.

His introduction to sawmilling came in the summer of 1882 when he was hired, at $9 per week, as a bookkeeper for Lee & McCulloch. This was a new company whose small mill with circular saws was located in Northeast Minneapolis. It is said that Backus admitted at the time that he knew nothing about lumber but was eager to learn.

Learn he did because the following year he was practically in charge of the firm. He then took advantage of a chance to buy Alexander McCulloch's share of the business, borrowing $3,000 to swing the deal. Three years later he bought Judson Lee's interests and was then completely on his own. He named his concern the E.W. Backus & Co. There were ups and downs in the succeeding years, mostly ups. He sold the circular sawmill, rated at 1 million feet per season, and bought 2 other plants that in 1892 produced 76 million feet. In 1893 a fire that swept a large part of the sawmill district destroyed both of the Backus plants along with 60 million feet of lumber.
Mill Syndicate
But the Backus firm survived and rebounded the following year with the purchase of a large North Minneapolis mill from the C.A. Pillsbury interests. Under Backus' leadership, 5 major lumber companies then formed a syndicate to acquire extensive timber lands in an area north of Brainerd to assure a supply for their mills.

Edward Wellington Backus

Edward Wellington Backus
In 1899 Backus acquired a partner in the person of William F. Brooks, a mechanical engineer formerly associated with one of Backus' competitors. The new firm was incorporated in 1902 under the name Backus-Brooks Company. It became the parent company for numerous subsidiaries that came into being with developments at International Falls, Fort Frances, Kenora and elsewhere. Brooks was treasurer and carried numerous executive responsibilities. He was elected in 1918 to represent his Minneapolis district in the State Senate, and served with distinction until his death in 1928.

Backus-Brooks sawmill operations in Minneapolis continued until 1906, when the remaining mill was sold. By then the owners were devoting most of their efforts to the new enterprises taking shape in the north.
Minneapolis Years
During his Minneapolis years Backus gained a broad acquaintanceship in the business world, providing contacts that often proved valuable in his larger ventures that followed in the North Country. It is written that he was easy to meet and had appealing features.
Water flowing over Koochiching Falls before dam was in place
Koochiching Falls was unharnessed until the dam was built from 1905 to 1909.
He was above average in stature and was considered quite handsome. A biographical sketch by Editor Larry Rossman of Grand Rapids, who knew Backus well, mentions his "expansive personality and pleasant smile." The biographer's appraisal of Backus is not entirely complimentary:

" With all his possessions, Ed Backus' personality was developed. He could be brutal, remorseless, ruthless, and not always (to say the least) ethical. Other times he could be exactly the opposite. His personality was such that he could obtain a respectful hearing before distinguished political groups on both sides of the international dividing line."

Backus' Peak
At his peak in the middle 1920s, Backus was a director of the Northern Pacific Railway, N. W. National Bank, Minneapolis, and several other firms in addition to being president of Backus-Brooks and all its many subsidiaries.

Industrial development of this area dates from 1900, when Backus-Brooks acquired the 127.5-acre Baker homestead adjoining Koochiching Falls. Here the big dam, a power house, mills and part of the new town itself would be built. Alexander Baker, the original owner and first settler of the area, had sold the tract in 1892 to W.V. Winchell and C.J. Rockwood.
Negotiations with the U.S. and Canadian governments for riparian rights — needed to develop the waterpower — began at the turn of the century and continued for several years. Construction of Koochiching dam began in 1905 and the massive structure wasn't finished until 1910 because of delays. A partially completed power house went into service in December 1909 and Falls and Fort Frances residents enjoyed for the first time the convenience of electric lighting.

Dam Construction at Early Stage (View from Canadian Side)

Dam construction area
Continued Business Expansion
Meanwhile Backus' men were busily engaged in buying forest lands and obtaining cutting rights for great volumes of timber that would be needed to feed his proposed paper and lumber mills.

The pace of development quickened after the Minnesota & International Railway reached the border in September 1907. It was a line Backus and the booming village of International Falls sorely needed. The Northern Pacific, operators of the M & I, had stopped construction when the rails reached Big Falls and the road was now overdue. Backus then formed a railway company of his own and threatened to build the 34-mile stretch himself. Under this pressure the Northern Pacific relented and put crews to work.

Building of the Falls paper mill began while work on the dam was still in progress. The plant, a 4-machine newsprint mill, was completed in the spring of 1910 and went into operation in June of that year. The mill, hailed as the most modern in the world, had facilities for making both ground-wood and sulphite pulp. A kraft pulp mill was added in 1917 to broaden the product line.

International Lumber Company Sawmill
The International Lumber Company sawmill was next on the Backus timetable. Erected on the riverfront just east of the Falls, it. too, was of most modern design and employed 300-500 men. Started up in August 1911, it operated until 1937 to set a record for longevity among plants of its size in Minnesota. Its peak year was 1917, when it sawed the timber harvest of 23 logging camps in Koochiching, Itasca and St. Louis counties. Backus-owned lumber operations in the 1920s included the Spooner, Minnesota, mill which Backus acquired from a Shevlin firm.
To provide transportation for construction materials, raw timber and finished products, Backus organized the Minnesota, Dakota & Western Railway, a common carrier connecting with the M. & I. at the Falls and the Duluth, Winnipeg & Pacific Railway at Ranier Junction, 3 miles to the east.

Falls Paper Mill at Start-Up (1910)

Aerial view of large Falls Paper Mill building in 1910
Portions of the M.D. & W. were built in 1909, the Loman line in 1910. The latter was envisioned as the first segment of a mainline that would tap Red River Valley agricultural areas by way of Thief River Falls. It was proposed to construct a flour mill at International Falls and the M.D. & W. would haul grain. The plans didn't materialize. Activity in the woodlands that Backus acquired increased while the paper and lumber mills were being built. These plants would need an enormous volume of timber and preparations had to be made to meet that need. Company-owned logging camps were established during this period and logging railways began stretching out.

Papermaking & Products
Newsprint was the 1 and only product of the Falls paper mill in its early years but the situation changed with the development of Insulite, beginning in 1914. This product, the first of its kind, was destined to play an important part in Company operations for the remainder of the Backus era, and beyond.

Looking for a way to utilize screenings that were a by-product of the papermaking process, Backus in 1913 named a committee of 3 to study the possibilities. The late Paul H. Kinports of the Falls was one of the 3. Discussions led to the hiring of Carl Muench, who had experience in the insulating field. In 1914 he designed a small cylinder machine that produced a sheet 4 feet wide. Mill mechanics assembled it in the basement of the plant, using scrap parts. Sheets were cut to length with a butcher knife and dried in a crude kiln. The machine worked and the quality of the product encouraged further experimentation.

In 1915 the machine was redesigned with still better results. The product was well accepted and markets were developing. Early uses for the product, which was first called Universal Insulite and then changed to Insulite, included roof insulation and the insulation of railway refrigerator cars. A large volume was used in the construction of temporary barracks during World War I. Research and market studies in the ensuing years led to numerous other products for specific uses: sheathing, siding, interior paneling, plaster base and ceiling tile being among them.
Success & Expansion
Needing room for expansion to meet growing market demands, the Company in 1925 built the Insulite machine room which is still in use (1983). Its Number 1 forming machine represented numerous improvements and was the first to produce a sheet 12 feet wide. Two additional machines were installed during the Backus years.

Courthouse & Paper Mill, Both Brand-New in 1910

Courthouse and Paper Mill buildings in 1910
The general success and profitability of the Falls Insulite operations undoubtedly figured in Backus' decision to build a mill in Karhula, Finland. The 2-machine plant was erected in 1930 at a cost of $3 million.

International Lumber Sawmill at the Falls - Built in 1911

Logs outside International Lumber Sawmill building in 1911
Other Mills
Using equipment and technology developed at the Falls, the Karhula mill began operating in 1931 - about the time Backus was losing control of his North American holdings. The receivers operated the plant until it was sold to Finnish interests just prior to the outbreak of World War II.

Backus developments north of the border were as extensive and as numerous as those in Minnesota — too numerous to be described in the space available here. His first venture into Canada, it appears, was his purchase of the Keewatin Lumber Company in 1906. In 1913 he acquired the Norman dam and in 1920 the Kenora Municipal dam, both investments being part of his plan to build a paper mill in the area.

Closer to home, the Fort Frances paper mill was constructed in 1912-'14 and expanded in 1927. International bridge across Rainy River, a property of International Bridge & Terminal Co., Ltd., was completed in 1912 to accommodate both railway and vehicular traffic.

Activities in Canada during the 1920s included construction of the Kenora pulp and newsprint mill, a facility that was expanded 2 years later. Hydro-electric developments on the Seine River, a major project, were completed in 1928. The 3 new dams and generating stations added 25,000 H.P. to the power supply at the Fort Frances mill. Also in the 1920s, Backus became affiliated with the Great Lakes Paper Company and was active in the firm when it built a large, modern mill at Fort William (Thunder Bay). The Number 1 paper machine in the new plant was publicized as the widest in the world.
Seymour W. Backus joined the Backus-Brooks organization in 1916 and became vice president with various executive responsibilities at Minneapolis headquarters and the mill towns. He was the younger of 2 sons born to Mr. and Mrs. E.W. Backus ( Elizabeth Horr). The elder son, Edward Raymond, lost his life in a hunting accident on Rainy Lake in 1912. The young man had graduated with honors from Yale University shortly before the tragedy occurred.

S.W. Backus & W.F. Brooks

SW Backus and WF Brooks
Residents of Minneapolis, the Backus families maintained a summer home on Huckleberry Island (the present Curtice Island), Rainy Lake, and occupied it each season for many years.

Boundary Water Controversy
A long and sometimes bitter controversy over the use of boundary water emerged in the mid-1920's and ended in a resounding defeat for E.W. Backus — the man who usually got what he wanted. His plans for hydro-electric development in the Rainy Lake watershed called for a series of power and storage dams stretching eastward from Lac La Croix. These dams, he contended, would increase and stabilize power generation at Koochiching dam; also prevent flooding. Announcement of his proposal drew strong opposition at once from conservation groups and private citizens of both the U.S. and Canada. The proposed dams, they argued, would spoil priceless scenery and constitute serious misuse of natural resources that belonged to the public.

Ernest C. Oberholtzer, Rainy Lake resident and dedicated conservationist, agreed to lead the stop-Backus campaign and was joined by Frank Hubacheck of Chicago, Sig Olson of Ely, and other wilderness advocates. The Quetico-Superior Council with Oberholtzer as president was founded in 1928 and played an important role in coordinating the campaign.

With public opinion strongly in their favor, the opponents finally won a clear-cut victory. Congress in 1930 passed the Shipstead-Nolan Act prohibiting further power developments in Superior National Forest, and in 1933 the International Joint Commission firmly rejected the Backus plan. His power, wealth and pleasing personality had proved to be of no avail.

End of the Backus Empire
More trouble was in store — trouble that would deprive Backus of his empire and wipe out his personal fortune.

The easy-money, free-spending years preceding the market crash of 1929 had been a period of great expansion of Backus companies on borrowed money. As the national economy weakened newsprint sales decreased and prices dropped to unbelievable lows. Backus was running out of money! The shock came on February 28, 1931, when Minnesota and Ontario Paper Company, the principal company, was forced into receivership after defaulting on a large obligation. Backus was among the receivers appointed by the court but resigned at the end of the year. R.H.M. Robinson became the managing trustee and guided the Company through 10 years of receivership leading up to a reorganization effective March 1, 1941. Robinson was elected president of the reorganized Minnesota and Ontario Paper Company.

Under the reorganization plan approved by the courts, bondholders, note holders and other creditors having tangible claims received payments in the form of new stock, bonds or partly in cash. Holders of the common stock, largely the Backus family, received nothing. The loss was estimated at the time at 50 million or more. Backus fought for several years to regain control of his empire but his death in New York City October 29, 1934, abruptly ended the struggle. His passing was page 1 news, for he was still a national figure, still a fighter at age 73!
Aerial photo of International Falls and Fort Frances Facilities in 1981
Industries founded by Backus flourish under Boise Cascade ownership. This photo taken in 1981 shows only portion of International Falls and Fort Frances facilities.