Between 1853 and 1855 the Watertown government issued nearly a half million dollars in bonds to provide capital for two railroads - the Chicago & Fond du Lac Company and the Milwaukee, Watertown & Madison Road - to build lines through the city. The railroads promised the city to secure this capital with a mortgage on the railroad property when the lines were constructed, but this promise was never fulfilled.
The railroads defaulted on the interest payments to the city and declared themselves bankrupt. Later, the Chicago & Fond du Lac Company converted these bonds to its stock at less than face value. The Milwaukee, Watertown & Madison Road refused to do even this. The people who owned the remaining bonds sold them to speculators for a fraction of their original cost, and the speculators then brought suit against Watertown to force payment on these bonds.
The city was determined to protect its property holders from the additional taxes needed to meet these payments. The action of the speculators' buying the bonds at a fraction of the original cost made the city even more reluctant to pay for them since the original owners had already taken their losses. For many years the aldermen elected in regular elections resigned immediately after they had declared the tax levy for the year. Thus, the city could not be served with a court order to force payment. After thirty-five years of court litigation the suits against the city were dismissed by the Supreme Court of the United States and Watertown returned to a normal government.
City Government 101
Written and contributed by Ben Feld
It is generally understood that in governing a municipality the governing body should be familiar with and adhere to the precepts outlined in the city charter and/or the state statutes. To do otherwise would be inviting trouble for the individual members of that governing body, to the municipality, and most certainly to the citizens thereof.
But what does one do if the expectations of the citizenry are in conflict with the laws which are to be obeyed? Disregarding the desires of the constituency does not get one re-elected; but on the other hand, the consequences of ignoring the rulings of the state legislature can have results even more undesirable.
That hypothetical situation became a reality late in 1868 when the city was served with a writ of mandamus issued by the United States District Court. Any writ of mandamus issued by such a high court is not to be taken lightly and was to be carried out even if it meant putting the entire city, every building, every home, every plot of ground, up for auction.
That sounds ominous; perhaps a word of explanation as to how the city council of Watertown arrived at such a point is warranted here.
Early in the 1850’s, with the influx of immigration having swelled her population, Watertown became the second largest city in the state and given her advantageous geographical situation, chances were very good that Watertown would soon become the capitol of the state. But, to compete with the other cities desiring to become the state capitol, a railroad was needed.
And in 1855 a railroad was put into service joining Watertown with Milwaukee and, through an expanding system of railroads, to Chicago and all points east. Obviously, the progressive segment of the population concluded, if being connected by rail to one city is beneficial, being connected to more cities would be even more beneficial.
Almost before the last spike had been pounded into the last tie of the Watertown-Milwaukee line, plans were being made to extend the line to Madison, to Beaver Dam, to Fond du Lac, to all points in between. And that brought out the speculators, the entrepreneurs, the fly-by-night railroad builders, all eager to reap the monetary benefits from building railroad lines. To do that required money, money which the speculators rarely had. So to solve that minor problem, the not-always-honest- builders appealed to the city of Watertown to issue bonds and sell them to raise funds to make railroad building possible.
And this the city did; they issued the bonds, sold them, and in someway they eventually found them selves being confronted with demands to pay the holders of those bonds huge sums of money. An explanation of the machinations involved is better left to those who understand monetary manipulations better than this writer. Suffice it to say that the bondholders felt they were entitled to much money from the city and the city was most reluctant to pay.
Eventually the amount being asked for exceeded the assessed valuation of the entire city; an alarming situation for any municipality.
“But it is a legal debt”, the bondholders maintained, “and must be paid”.
“Legal debt or not, we cannot pay it”, the city countered.
“But you must”, the bondholders insisted.
“So sue me, “responded the city council.
And sue them they did -- or at least tried to. In December a writ of mandamus was received from the United States Circuit Court ordering the city council of Watertown to pay Pitkin C. Wright and James H. Rees the sum of money they deemed was owed them. (A writ of mandamus is an order instructing the recipient to do something stipulated -- or else!)
That obnoxious writ put the city council on the very horns of a dilemma. To invalidate that edict, which promised to be the ruination of the city, called for some creative governing. To refuse to make payment to P. W. Wright and J. H. Rees would put the council in danger of incarceration which would be intolerable for these upright, law-abiding public officials.
On the other hand, making the payment would put the city onto the path to bankruptcy but would please the constituency and go a long way toward insuring re-election.
They agonized over the solution for a suitable length of time until someone, no one ever leaked the slightest hint of who it was, came up with a truly awesome solution which didn’t really solve the problem, but did give the city a fighting chance by delaying any action long enough to take advantage of a technicality in recently enacted legislation. Taking advantage of that technicality, the city might be able to stall just long enough until requests for payment of funds owed Wright and Rees would no longer be valid, the statute of limitation having expired.
Thus was born the AW SHUCKS!! system of governing or, as it was more aptly expressed in those days, the Ach du lieber! system of city government, a simple but very effective system.
To affect it, one half the aldermen resigned leaving the city without a viable government. The remaining seven would meet regularly, and a resolution to appropriate money to pay those cursed judgments would be passed unanimously; whereupon the point of no quorum would be raised and it would be discovered that the passing of the aforementioned resolution was invalid, there not having been a quorum voting. So, although the minutes of the meeting showed they had voted in favor of paying Wright and Rees, it was impossible to actually make the payment.
“AW SHUCKS!” (or words to that effect) the truncated city council would inform Wright, Rees, or whoever was asking for payment. “We tried. We really tried. But if there is not a quorum present, it is not possible, legally, to make an appropriation of any kind. We’ll try again at the next meeting.”
Ach du lieber! What will happen next?
By dragging their feet and avoiding service of another writ of mandamus, the statute of limitations did kick in and finally, in 1889, the court declared that, except for two small claims which the city agreed to pay, all past, present and future claims were invalid.
History of Watertown, Wisconsin