In order to spur its growth by making travel easier for the population and all the goods they wanted to buy or sell, the State of Michigan went into the railroad business and established three railroads: the Michigan Northern, the Michigan Central and the Michigan Southern. The last would run from Monroe near Lake Erie to New Buffalo on the shore of Lake Michigan, passing

through Hillsdale County. In 1838 thousands of men working with picks, shovels and mules began the monumental task of leveling the land and laying track for the Michigan Southern Railroad. But just when it reached Hillsdale in 1843, the state ran out of money. 

The willingness to take great risks in an emerging market sometimes leads to great rewards … and sometimes to ruin. In the railroad business in the 1800s, a man’s fortunes rose or fell based on fearless speculation that sometimes strayed into stock manipulation, political influence peddling and the flouting of laws. Hillsdale County’s Henry Waldron, Charles Mitchell, Elisha C. Litchfield and Chauncey Ferris fell into the fearless speculation column. When the State of Michigan ran out of money to complete the Southern Railroad, these four men took a risk that helped make their fortunes. To build the Michigan Southern as far as Hillsdale cost about $1.3 million, but when it went on the auction block in 1846 they got it for a song, about 42 cents on the dollar. Litchfield purchased 1,000 shares, Ferris and Mitchell 200 and Waldron 120, and Litchfield became treasurer of the new company, now called the Michigan Southern Railroad Company.     

These four speculators profited from their investment when Hillsdale remained the terminus of the line for several years, becoming the shipping point for three counties. It actually was a great deal for the village. When people or freight needed to go somewhere beyond Hillsdale, other transport was required. People needed a place to stay until a stage coach was going where they wanted to go, and freight needed to be stored until a wagon train took it to its final destination. Thus, hotels sprang up and the forwarding business was established. Charles T. Mitchell had settled in Hillsdale because of the great potential of the railroad and erected one of the first warehouses where goods could be stored. Soon the railroad track was lined with warehouses and at least one tavern, complete with “ladies of the evening.”

Despite the risks, speculators continued to invest in railroads. In 1869 there were 29 railroad company start-ups in Michigan, the Detroit, Hillsdale & Indiana (DH&I) among them. Three men on its Board of Directors came from Hillsdale: John P. Cook and brothers Henry and William Waldron, with Henry serving as its first president. 

 There was an oddly casual (and somewhat suspect) amassing of the amount of money necessary to begin construction on the DH&I. No promoters whipped up enthusiasm in the new railroad and no newspapers, important allies for the promoters, seemed aware that it had been proposed. Nonetheless, a total of $80,000 in stock subscriptions materialized. Although it was never proven, James Joy, president of the Michigan Central Railroad, was probably the puppet master behind the establishment of the railroad. He was interested in knocking out competition from the Michigan Southern and saw that by using the DH&I tracks he would shorten the journeys to Detroit and Indianapolis by Michigan Central trains. Reportedly, Joy sweetened the deal by promising to “iron the rails” (lay rails) after laborers had leveled and prepared the grade. After that unique beginning the building of the railroad followed a more normal path, with promoters fanning out to the towns in Hillsdale County hoping to sell the populace on the project.

The “Detroit, Hillsdale & Indiana” was a grander name than it delivered. It actually started in Ypsilanti, with a juncture in that city to the Michigan Central tracks that continued on to Detroit. The plan to reach Logansport, Indiana, never materialized. The DH&I rails ended on land deeded to the railroad by Horace Banker, who, with his brother George, settled there in 1838. The sawmill site known as Bankers Station became the town of Bankers. At Bankers passengers, mail and freight transferred to the Fort Wayne, Jackson & Saginaw Railroad to get to Indiana or to go north. 

With sufficient stock subscriptions obtained, rights of way granted, voter approved bond proposals passed and high hopes, in November 1869 construction on the DH&I began. As many as 4,000 men were employed to lay the tracks, many of them immigrants from Germany and Ireland. Because of the nationalities of these immigrants, the railroad was jokingly called the “Dutch and Irish,” a nickname that persisted locally even after the railroad was completed. 

 Great excitement accompanied the establishment of the route of the railroad, communities where the trains were to stop envisioning the added commerce and prosperity it would bring to them. In Somerset Township three DH&I stations were established. At the western edge of the township the railroad passed over land belonging to neighbors Jerome Smith and MaryBegel. They enthusiastically planned the town of Jerome (a name that apparently had more of a ring than a town named “Mary” might have). Then a depot was built by the DH&I before the town was even platted. In  the “post village” of North Adams a station, freight house and dedicated siding were built because it was a larger and more developed community than the other towns (or planned towns) along the route. 

The first train to cover the entire 65 miles that constituted the DH&I reached Bankers on Dec. 11, 1871. Mail trains eventually continued on to Reading and Montgomery, which were listed on the train schedule as “Camden.” In the same month that the first train reached Bankers, telegraph wire was finally strung between Ypsilanti and Hillsdale in

order to alert towns along the line when trains were coming on the single track. Although train schedules were published, special excursion trains or work trains showed up on the tracks with no warning. It took an extra measure of courage to ride the train before the telegraph could broadcast these surprises.

The Hillsdale station boasted a depot with an engine turntable and rudimentary engine coaling and watering equipment, as well as a freight house. The end of the railroad in Bankers, however, had no such amenities. Once the train reached that station it needed to back up to the Hillsdale turntable in order to travel to Ypsilanti face first. Somehow the problem was solved and Bankers eventually had a depot, freight house, a

turntable and a master mechanic, William Carpenter.  A resort sprang up too, with a hotel across from the depot and the lake beyond it. Like local land owners in other parts of the county, those in Bankers capitalized on the increased exposure of their village when the train came through. Today only the depot remains, moved to private land when it was slated for destruction. It is unrecognizable, sided with metal and used for storage. Stepping through its door, however, the walls stand unchanged from the days when Bankers was far different from the sleepy hamlet it became after the passing of the railroad.

The failure to thrive of many railroads illustrates why sober investors stayed clear of railway companies. The goal of all investment is profit. Railroads could prosper in a couple of ways. One would be to choose a route that would be heavily utilized by passengers, mail and freight. Another path to profitability would be lining up as the critical link needed by another railway to get freight, mail and passengers between major markets efficiently. In that case, the other railroad would either lease the tracks or buy them. 

Although other railroads paid for the use of the DH&I tracks, that wasn’t enough to save it, and its demise was probably hastened by the worst financial depression the country had seen. By 1872 the annual report was dismal, showing mounting debt. Various attempts to revive the company were unsuccessful, and on Jan. 28, 1875, the single bidder paid $16,000 for the company, which then became the Detroit, Hillsdale & South Western (DH&SW). 

In 1880 the railroad seemed to show a spark of life with increased activity. Unfortunately, it was only an illusion created by J.W. Smith, the general manager of the DH&SW as well as of the Toledo & Ann Arbor Railroad. In a gutsy (though questionable) scheme to save the railroad, Smith supposedly dispatched large numbers of empty Erie & North Shore engines and boxcars along various points of the DH&SW to give the appearance of heavy traffic. It was a clever idea, but it didn’t work. Within a year the company ceased operating as a railroad, its tracks leased to other railroads.  

While the short lifespan of the DH&I was being played out, a larger picture was being painted by railroad tycoons Jay Gould and Cornelius Vanderbilt. Their bitter rivalry was fought over whether the Michigan Central route, favored by Vanderbilt, or a more southern route, following the Wabash Railroad route controlled by Gould, would become the major railway running from the east to Chicago. In a series of moves worthy of chess masters, the two moguls manipulated stock acquisitions and rumors in order to gain a railroad monopoly on the southern edge of Michigan. Vanderbilt emerged victorious from this struggle. He masterminded the merger of the Lake Shore Railroad with the Michigan Southern in 1877, calling it the Lake Shore & Michigan Southern (LS&MS). Along with the power he held as the majority stockholder of the Michigan Central, the addition of the LS&MS rail system gave Vanderbilt the control over the rails (and victory over Jay Gould) that he sought.

On July 1, 1881, the LS&MS quietly leased the DH&SW tracks. The DH&SW, which hadn’t realized a profit for the past six years, got an amazingly sweet deal with the leasing fee. Vanderbilt made it clear in his 1882 report to stockholders of the Michigan Central that the value of the DH&I route rested not in the route, but in keeping it from Jay Gould

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The unstoppable march of larger railroad companies absorbing those that were smaller continued. On Dec. 22, 1914, the LS&MS merged with the New York Central & Hudson River Railroad to become the New York Central Railroad. In turn, the NYC was purchased by the Penn Central in 1968. In 1976 Conrail purchased the bankrupt Penn Central and made a business decision to cease rail service in Hillsdale County. 

JoAnne P. Miller  2015