Albert Scheffer

Introduction

The life and career of Albert Scheffer (born March 14, 1844 in Rheinberg, Kingdom of Prussia; died September 29, 1905 in St. Paul, Minnesota), a St. Paul, Minnesota, businessman, is entwined with the financial development of the American Upper Midwest in the latter nineteenth century. He founded numerous banks and companies with great hope but eventually closed them with much sorrow. In the 1890s, financial bail-outs and investor safeguards did not exist. Undercapitalized or heavily leveraged businesses and banks failed often, especially during periodic downturns in the business cycle, taking principals and shareholders down with them. Scheffer was more than just a businessman, though. During his long career, he also became deeply involved in civic affairs in St. Paul, in local and state politics, in the fraternal affairs of Civil War veterans, and in caring for his extended family. Scheffer’s life provides an illustration of how an immigrant engaged in the free-wheeling, American capitalist economy of the Gilded Age and found great success and even greater failure.

Family Background

Historians often rely on personal and professional correspondence or diaries to make sense of an individual’s career and significance. In the case of Albert Scheffer, such sources do not exist. He and his descendants saved only a few documents and – as befits a man of finance – ledgers. The leather-bound ledgers list his income and expenses and were carefully maintained by several different clerks and even Scheffer himself. They were categorized as personal (travel and clothing), gifts (charity and dues), household (newspapers, books, utilities), and furniture (horses, a cow, phaeton, an onyx table, and a marble bust of Mrs. Scheffer.). Special expenses included travel, a Grand Army of the Republic (GAR) suit, and repairs to his officer’s sword. The ledgers also document in detail his financial involvement with banks, building societies, real estate partnerships, and other local companies.

Albert Scheffer and his wife, Marie Margaret Dreis (1848-1915), both immigrated with their parents and siblings to the United States from the German lands. At the age of five, in 1849, Scheffer and his family left Rheinberg, a community located north of Duisburg on the west bank of the Rhine, and arrived in New York City. They then traveled west to Fond du Lac, Wisconsin. Marie Margaretha (often known as Maggy) arrived to Chicago in 1851 when she was three. Albert Scheffer was one of eight children born to Joseph Scheffer; his wife was one of Peter Joseph and Maria Gertrude (née Neis) Dreis’ seven children. The Dreis family remained in Chicago for several years before taking the new Galena and Chicago Union Railroad west to Galena, Illinois, and then sailing north on Captain Daniel Smith Harris’s famous steamboat, “War Eagle,” to St. Paul in 1855. Marie Margaret’s father had been a painter in the family’s hometown of Trier, which lay along the Mosel River in Rhenish Prussia, but apparently was not able to continue that occupation in Minnesota.[1]

Albert Scheffer attended Professor Peter Engelmann’s German-American Academy in Milwaukee, Wisconsin, before moving west to St. Paul, Minnesota, in 1859 at the age of fifteen.[2] He worked as a clerk for the Daniel W. Ingersoll Company, a St. Paul dry goods firm that later became the Field-Schlick department store, and then for the First Bank of Stillwater. His older brother, Charles, had founded the bank and he served as a mentor to young Albert. Banking, as an employee, officer, and founder would thereafter become his career. In the summer of 1864, during the peak of the American Civil War, Albert Scheffer returned to Milwaukee to enlist for a one-hundred-day term of service in the Thirty-Ninth Wisconsin Volunteers. Units like the Thirty-Ninth served in reserve roles and freed-up combat units for front-line duty. Enlistment papers describe Scheffer as brown haired, blue eyed, and five-feet-eleven-inches tall. Following his stint as a “Hundred Day Man,” he was ordered to report to the newly-formed Forty-Fifth Wisconsin Volunteer Infantry Regiment, where he received a commission as a second lieutenant. The unit garrisoned Nashville, Tennessee, for the remainder of the Civil War. He was promoted to first lieutenant before being mustered out of federal military service at the end of the conflict.

A tribute to Scheffer noted that his military service, due to “lack of opportunity, was not especially active, [but] it was highly honorable and characterized by intelligence, aptitude, diligence and fidelity in the discharge of his duty.”[3] His rear echelon duties gave him entrée into the two major Civil War veterans’ organizations: the Grand Army of the Republic, which welcomed anyone who had served in the Union forces as a member, and the Military Order of the Loyal Legion of the United States (MOLLUS), which was open solely to Union Army officers. He belonged to Acker Post of the GAR and the local commandery of MOLLUS, both located in St. Paul.[4]

Albert Scheffer and Marie Dreis were married in 1869 and lived for most of their lives together on St. Paul’s East Side.[5] In 1885, they purchased a showplace home at Fifty-Two Bates Avenue that had been built by Truman Smith in the 1850s and they lived there until 1897. The house, which had been given its cupola by another owner, Commodore William Davidson, a former steamboat captain, had wonderful filigree carvings on the porches and looked as though it had floated up from the Mississippi levee to forever watch the traffic on the river.[6] The house still exists, but the address is now on Mound Street.[7] The couple’s last residence was a house at 267 Maria Avenue.

The Scheffers had eight children, but only six reached adulthood.[8] Two died as infants and Louis, the eldest, contracted pneumonia and died during the second St. Paul Winter Carnival in 1887. Only two of their children married: Marie to William Hamm in 1892 and Ilma to Joseph Ermatinger in 1926. Ary, the youngest, became a bookkeeper in the family tradition. Ilma owned a restaurant, Café Ilma, in downtown St. Paul between 1932 and 1942.[9]

Business Development

During his career, Albert Scheffer was involved with numerous business ventures related to the economic development of St. Paul, Minnesota, and the surrounding region (for a complete list of his career, see this chart). Through banking, he acquired investment and social capital that he leveraged in order to enter new sectors such as newspaper publishing, land acquisition, natural resources extraction, and insurance brokering. These businesses prospered during the era of recovery that followed the long economic depression of the 1870s (resulting from the financial Panic of 1873). However, the Panic of 1893 revealed significant weaknesses in these firms and set the stage for Scheffer’s epic financial failure.

In 1861, at the age of seventeen, Albert Scheffer found employment as an assistant cashier for William Dawson and Robert A. Smith, the proprietors of a private bank in St. Paul. At that time, private banks were not obliged to incorporate and take out state charters like banks of issue (banks that could issue currency); consequently anyone with a little money and a lot of courage could start such a business.[10] In 1870, Scheffer joined Dawson and Smith as a partner in the banking operation, and eleven years later his name was added to the company masthead: Dawson, Smith & Scheffer. In 1882, the partners reorganized the bank and took out a charter under Minnesota law as the Bank of Minnesota. The firm continued to do business until 1896, when it became insolvent and had to close its doors.[11]

Scheffer also served as an officer in various Minnesota businesses including the St. Paul Globe and Die Volkszeitung newspapers, the Hauser Malting Company, and the Scheffer-Rossum leather-goods firm, among others. His nephews, Alfred and Hermann, worked for the Scheffer-Rossum firm which marketed saddles and bridles, as well as boots and shoes.

Albert Scheffer presided over the affairs of numerous building societies from 1878 until 1882. These mutual organizations became quite popular following the Civil War and specialized in making small mortgage loans to members in fairly humble circumstances. Journalist and academic Albert Shaw discussed building societies approvingly in an 1888 study of the institutions. “The losses,” he wrote, “of these societies have thus far amounted to practically nothing, and the foreclosure of mortgages has been of rare occurrence.”[12] Scheffer served as treasurer or president of, among others, the Workingmen’s, the Franklin, the Mechanics, the Fifth Ward, Homestead, and the People’s building societies.[13]

Scheffer invested capital in land speculation, anticipating that settlers would continue to acquire farmland and urban plots across the region. He owned Minnesota land in Otter Tail County, near the state’s western boundary with North Dakota, and in the community of West St. Paul, located across the Mississippi River from St. Paul in Dakota County. He also acquired shares of stock in some rather speculative enterprises, such as a gold mining concern in Fort Meade, South Dakota.

Albert Scheffer was also attuned to the fact that the region’s economic development had become truly international in scope by the last third of the nineteenth century. Between 1885 and 1892, Scheffer and two associates served as agents for the London & Northwest American Mortgage Company, an English corporation, and were involved in making or acquiring mortgage loans in Minnesota and the adjoining states.[14]

Scheffer saw value in pooling the significant financial resources of local elites in order to promote manufacturing and development in St. Paul. In April 1890, the St. Paul Daily Globe reported that a group headed by Scheffer had proposed establishing a firm “to act in the interests of the manufacturing industries of the city as a loan and investment company, with $1,000,000 [approximately $27 million dollars in 2011 dollars] as its capital stock.”[15] Many prominent citizens provided their names and subscribed funds to the new Manufacturers’ Loan and Investment Company.[16] The significant size of the proposed capitalization may have been too large a goal to meet through local investment, however. Local newspapers provided no further indication that the minimum investment had been met or that the company had begun business operations.

While many of Scheffer’s enterprises seem to have prospered at first, by the early 1890s the situation had changed dramatically. A number of firms over which Scheffer presided went bankrupt, including the Allemannia Bank and the St. Paul German Insurance Company. He was accused of embezzling funds and comingling personal and corporate moneys. While Scheffer was acquitted of these charges in 1897, his financial career in Minnesota was all but over. The last few years of Scheffer’s life were spent in New York City where he hoped to revive his business prospects. Family information does not indicate what transpired during this period. Scheffer eventually contracted cancer and returned to St. Paul, dying in 1905.

What Tangled Webs We Weave: Scheffer’s Financial Failure

Although Albert Scheffer was involved in the banking and financial sectors from the beginning of his career, as bank employee, cashier, and officer, and as a director and treasurer of various financial institutions and companies, it was only in the mid-1880s that he finally reached the “big time” and served as the head of a number of financial institutions.[17] Scheffer’s business ventures included banks and insurance companies, the failure of which may have been affected in one way or another by the Panic of 1893. The depression that followed the panic produced a massive contraction in the American economy that only ended in 1897. The stock market collapsed, unemployment soared, farmers faced rock-bottom prices, and as many as 500 banks and 15,000 companies failed. The price of silver fell dramatically due to overproduction in western mines. This affected the ability of the U.S. Treasury to redeem banknotes and, as a result, many banks were forced, albeit unsuccessfully, to call in their loans. Wild runs on these banks followed and many became insolvent and were forced to close their doors. Scheffer experienced the crisis firsthand due to his involvement in the local banking and insurance sectors.

On May 2, 1887, Albert Scheffer established the Commercial Bank in St. Paul. This was the first major business venture over which he presided. The bank was organized with a capital stock of $500,000 (approximately $12.2 million dollars in 2011$), of which Albert Scheffer owned $100,000 (approximately $2.5 million dollars in 2011$). Scheffer was named president of the firm. In the wake of the 1893 panic, however, the bank could not maintain sufficient capital reserves and became insolvent. The bank’s stockholders received thirty percent of the par value of their stock. A new injection of capital from additional sales of company stock enabled the bank, now renamed the Allemannia Bank, to reopen. Its new capitalization was $400,000 (approximately $10.3 million dollars in 2011$), of which Scheffer owned $70,000 (approximately $1.8 million dollars in 2011$). He then transferred his Allemannia Bank stock, and all of his other liquid assets, to a newly-formed company, the Local Investment Company. Promissory notes and all of the stock of the Local Investment Company were turned over to the Allemannia Bank as security for Scheffer’s various debts.[18]

In 1889, two years after he organized the Commercial Bank, Sheffer founded the St. Paul German Insurance Company. The name he selected for the new fire insurance provider probably indicated his intention to seek business from the German community in St. Paul, which numbered upwards of 13,000 foreign-born residents and many second-generation offspring.[19] Scheffer served as president of the firm, which was capitalized for $500,000 (approximately $12.6 million dollars in 2011$).[20] One New York-based business publication noted that “it is in fact one of the solid and prosperous fire associations in the United States, and has secured an enduring hold on public confidence and favor.” That publication went on, “… during the two and a half years since intervening its career has been an unbroken record of progress. It is conducted on sound and conservative, albeit liberal and progressive business principles…”[21]

Scheffer also sought out other opportunities to expand his fire insurance operation. In 1890, he organized the Hekla Fire Insurance Company to provide coverage for members of the Farmers' Alliance, an organization that lobbied for economic reforms on behalf of farmers in the 1870s and 1880s (and evolved into the People’s Party in the early 1890s). Scheffer had originally hatched the scheme in 1888 while working with George Sprague, the president of the Minnesota chapter of the Farmers' Alliance during a run for state governor (discussed below). Scheffer hoped that by underwriting the influential organization’s fire insurance plan, he could secure their endorsement in the gubernatorial race. Ignatius Donnelly, the noted Minnesota politician and populist writer, recommended that the Farmers' Alliance avoid partisanship by rejecting Scheffer’s proposal, but Sprague and Scheffer eventually went through with the plan. After Scheffer founded Hekla in 1890, he gave company stock to Sprague and named him president.[22] Included among the assets of the new firm were shares in the Commercial Bank totaling $136,200 (approximately $3.5 million dollars in 2011$).[23] In 1891, Hekla was purchased by Scheffer’s St. Paul German Insurance Company, which may have been a strategy on Scheffer’s part to consolidate his business holdings and preserve his capital and control over the firm.

While the St. Paul German Insurance Company received positive press in New York, many in the local St. Paul business community considered it to be a “plunger” in the fire insurance business. A “plunger” was a colloquial term for a rash speculator; certainly not a ringing endorsement for the firm. The company was involved a sensational controversy with the New York State Insurance Department in 1891, two years after its founding. State regulators objected to the scope of its assets and revoked the company’s certificate to do business in New York. Among the assets owned by the company at the end of 1890 were shares in the Commercial Bank and the Hauser & Son Malting Companies (companies owned or controlled by Scheffer) with a purported market value exceeding $60,000 (approximately $1.5 million dollars in 2011$). The Commercial Bank held cash deposits totaling almost $83,000 (approximately $2.1 million dollars in 2011$) at the time. Soon, Indiana insurance authorities refused to license the company to do business in the state, and the Wisconsin Commissioner of Insurance pronounced it insolvent.[24] The St. Paul German Insurance Company made an assignment for the benefit of creditors (a form of corporate dissolution) on April 16, 1892, and closed its doors on May 5, 1892.

In June 1892, Henry Villard (a German-American financier and one-time president of the Northern Pacific Railroad) happened to be visiting St. Paul. On Hotel Ryan stationery he wrote a sympathy note to Albert Scheffer, saying:

I sincerely hope that your financial troubles may be only temporary ones, and that you may soon be relieved from the great anxieties that have been hanging over you for months.

When the crises of my affairs overwhelmed me in 1883-1884, I had little hope left of being able to recuperate, but things righted themselves in a short time with me and I trust this may be also your experience.[25]

Scheffer formed the Northwestern Security Investment Company to buy the assets of the defunct St. Paul German Insurance Company for $30,000 (approximately $765,000 dollars in 2011$), a dramatic decline from its original $500,000 valuation in 1889. All of the stock went to Scheffer, and was deposited as collateral for notes which Scheffer owed to the Allemannia Bank.

Despite having deposits in excess of $300,000, the Allemannia Bank failed on January 4, 1897. According to statements made by Scheffer when questioned by counsel in a court deposition regarding the failure, “there were six other banks that had closed before our Bank and I think seven or eight in Minneapolis.” The 1896 failure of those banks had “…not only a depressing, but paralyzing…” effect upon market values and the sale of property. And, Scheffer concluded, “… these failures resulted from the “sixteen to one” agitation,” a reference to the Populist Party platform that sought to promote inflation and counter the depression of the mid-1890s by reinstituting the official use of silver as federal coinage at a sixteen to one ratio with gold.[26] Despite Scheffer’s argument that populist politics were to blame for his bank’s failure, it is more likely that the failure stemmed from systemic financial uncertainty resulting from the 1893 panic and the depression that lasted through 1897.

The incestuous financial relationships between the various companies headed by Scheffer created a domino effect as the collapse of one firm put increased pressure on the others. Scheffer did not recover from the economic pain and the loss of public confidence that he incurred as a result of these failed enterprises. The failures ended his professional career in St. Paul and exposed him to criminal prosecution and shareholder anger.

Scheffer’s personal liability of $80,000 (approximately $2.2 million dollars in 2011$) to the Allemannia Bank, resulting from the aforementioned financial transactions, appeared to exceed the limit imposed on bank officers by Minnesota state law. As a result, Scheffer was indicted for grand larceny later in 1897, and the matter was presented to the Ramsey County grand jury. However, based on unrelated procedural matters, the indictment was set aside and Scheffer avoided prosecution.[27]

In an attempt to recover some of his losses, Scheffer represented a number of Allemannia Bank creditors who petitioned the local district court to authorize reorganization of the bank under Minnesota law. The district court judge dismissed their request. Four months later, Scheffer submitted the same petition to a different district court judge who, not knowing about the previous motion, approved the proposed plan of reorganization. During this process, Scheffer failed to notify many of the bank’s shareholders and creditors about the reorganization scheme, as required by state law. The creditors challenged the reorganization plan and the case eventually reached the Minnesota Supreme Court. The justices were not pleased by Scheffer’s questionable conduct, though they ruled in his favor based on other factors.[28]

During his banking career, Scheffer often held testamentary trust funds for various family members and friends. In one case, Scheffer received $9,000 to hold and disburse for the benefit of Eugene St. Julien Cox, an impeached Minnesota judge,[29] and Scheffer gave a bond in that sum for the faithful performance of his duties. The district court ruled in 1899 that Scheffer had “in some way” lost the entire sum entrusted to him. Following Scheffer’s 1905 death, his estate was deemed insolvent, and a suit was initiated successfully to recover the sum from the bondsman instead.[30]

Scheffer moved to New York City in 1899 following the collapse of his St. Paul business empire. He carried letters of recommendation from, among others, William Rush Merriam, then director of the U.S. Census Bureau (who had beaten Scheffer in the 1888 race for Minnesota governor); John Ireland, archbishop of St. Paul; Cushman Kellogg Davis, former governor and senator from Minnesota; Henry Villard, former president of the Northern Pacific Railroad; and Andrew McGill, another former governor of Minnesota.[31] The letters range from coolly official to genuinely enthusiastic. The latter were undoubtedly from friends who recalled Scheffer’s enthusiastic civic and fraternal work in St. Paul. For example, Archbishop Ireland, who was then staying at the Waldorf Astoria Hotel in New York City, wrote to W.R. (William Russell) Grace of the ocean shipping firm:

I beg leave to present to your kind favor Mr. Albert Scheffer of St. Paul. Mr. Scheffer is one of our most esteemed citizens, and a friend of mine for many years. He is a gentleman of recognized personal integrity. Of the matter itself of which he desires to speak to you, I know nothing.[32]

While in New York, at the sunset of his long career, Scheffer was actively involved with the American Guano Company in a failed scheme of the promoter, Underwood, Fankhauser & Co., to obtain a concession to recover one million tons of guano from uninhabited islands in the Caribbean, the Gulf of Campeche, and the Pacific Ocean. For his assistance, if the scheme had succeeded, Scheffer would have received one-quarter of the capital stock of the American Guano Company, apparently valued at $250,000 (approximately $7 million dollars in 2011$).[33] However, the venture came to naught and Scheffer was forced to seek other opportunities.

Social Status: A Babbitt in St. Paul

It is often said that the Germans who came to St. Paul, Minnesota, opened businesses and founded cultural institutions, leaving it to the Irish to handle city government and politics. A few German immigrants, however, attempted to do both. In addition to his commercial ventures, Albert Scheffer played an active role in local politics, fraternal societies, and civic affairs. He helped to plan and organize all of St. Paul’s major civic events from 1883 until 1896, employing his knowledge of the local German community and his experience in financial matters. Unsurprisingly, his role on these committees was frequently that of treasurer. St. Paul’s Scheffer Avenue and Scheffer Elementary School – opened in 1888 and demolished in 1974 – attest to his significance within the community during the late nineteenth century.[34]

Albert Scheffer’s role in civic affairs began in the early 1880s. St. Paul’s population had topped 40,000 residents and civic leaders wanted to demonstrate what a metropolis the river community had become. In 1883, the city marked the completion of Henry Villard’s Northern Pacific Railroad from Minnesota to the Pacific Ocean by hosting a large celebration. Villard (born Heinrich Hilgard in the German city of Speyer) had worked as a newspaper correspondent after he immigrated to the U.S. His travels around the United States convinced him of the value of transcontinental railroad lines. He acquired control of the incomplete Northern Pacific Railroad in 1883 and recruited investors to finance its completion before the end of the year. Scheffer served as a member of the executive committee that traveled east to Chicago to greet both Villard and the various German guests who planned to attend the Golden Spike celebration. Some of them represented the German government and others were investors in the Northern Pacific Railroad. Once in St. Paul, the dignitaries witnessed parades showing off the city’s commercial and industrial might, decorated arches over the streets, and an elegant banquet at the Hotel Lafayette on Lake Minnetonka. President Chester Arthur spoke at the banquet. Later, the guests traveled west to the Montana Territory to see the Golden Spike ceremony celebrating the completion of the railroad on September 8, 1883.[35]

A few months after he was fêted in St. Paul, however, Villard witnessed the financial collapse of his railroad as reports of watered stock and shaky finances reduced shareholder confidence and forced major institutional investors to step in and take control of the company. Villard was so vilified publicly for his poor management of the firm that he returned to Germany for a few years. As his aforementioned 1892 letter to Scheffer indicates, Villard managed turn his fortunes around, at least temporarily, though control of the Northern Pacific would eventually pass to rival railroad magnate James Jerome Hill of the Great Northern.[36]

In 1886, the St. Paul business community launched the first of what would eventually become an annual Winter Carnival. They sought to showcase the city as a pleasant place to visit – even in winter – and also as a place to trade since it was the railroad gateway to the Northern Plains and Pacific Northwest.[37] The Winter Carnival with its grand ice palace, slides, ice sculptures, and sporting events captivated the city and its guests for most of January and February of that first year. Scheffer served as treasurer for the executive committee organizing the festival; his wife, Marie, became the carnival’s princess. Her consort was William Hamm, Sr., son of brewer Theodore Hamm. In 1892, William Hamm married the Scheffers’ daughter, Marie. The prince and princess presided over the German community’s carnival parade, riding in a carriage with Mrs. Scheffer’s sister, Ana Marie Giesen, and her husband, Peter Joseph Giesen.[38]

The city hosted a major civic celebration once more in June 1893. It honored James J. Hill whose Great Northern Railroad had completed its line from St. Paul to Takoma, Washington, on Puget Sound, earlier that year. Scheffer attended the dinner for Hill, held in the Aberdeen Hotel, but may not have been involved with the committees organizing the events due to his business hardships.[39] The Loyal Legion, to which Scheffer belonged, held their quadrennial national convention in St. Paul during that same week.

In addition to these major events, Scheffer was involved with conventions for the Sons of Hermann, a German fraternal order, and, in 1881, a biennial sharpshooters’ festival. Scheffer was a member of the St. Paul Gun Club and served as president of the Northwest Association of Gun Clubs, which hosted the event that year. The largest of all these events, by a factor of a hundred, was the Thirtieth National Encampment of the Grand Army of the Republic in 1896.

Albert Scheffer enjoyed hunting and target shooting. He also patronized the local German theater, the Turnverein, and the Mozart club. He was a life member of the Minnesota Historical Society. His personal financial ledgers note expenditures for history and art books (“for Marie”) and a piano. Treasured by the family was a marble bust of Marie, carved by the state’s first professional sculptor, the Norwegian-born Jacob Fjelde. During his short time in the Twin Cities Fjelde completed the well-known statues of Hiawatha and Minnehaha, Minerva, the violinist Ole Bull, the dramatist Henrik Ibsen, the monument to the First Minnesota Volunteer Infantry Regiment at Gettysburg, and a number of clay or bronze busts of important Minnesota men. The marble sculpture of Marie Scheffer may well be one of his few works showing a Minnesota woman of the time. The cost for the bust, listed in Scheffer’s ledger entries for 1887, was $647.96 (approximately $15,800 dollars in 2011$), hardly an insignificant sum of money at the time.

While numerous photographs, engravings, and caricatures of Albert Scheffer exist, one painting in particular seems to have disappeared. In 1888 John Antrobus, an English artist, arrived in St. Paul. He rented one of the largest rooms at the Metropolitan Hotel which he used as a studio. A reporter noted that Antrobus had completed portraits of both former governor John Pillsbury and Albert Scheffer.[40] Antrobus painted Scheffer “with one hand thrust carelessly into the breast of his frock coat while the other holds his familiar slouch hat at his side. The pose of the figure is most graceful… an excellent and spirited likeness.”[41] It was also a rather Napoleonic pose, which Scheffer repeated in at least two photographs.

A Professional Veteran

Following the end of their military service, some men and women pack their uniforms in mothballs and return to civilian life. Others, such as Albert Scheffer, maintained the camaraderie of the wartime experience through active membership in veterans' organizations. For a businessman like Scheffer who was also interested in politics, involvement in GAR activities was a vital and necessary part of his life. He served on five GAR national councils of administration, representing the state of Minnesota before the national organization.[42] The extent of Scheffer’s involvement in the GAR is revealed by the fact that he saved over forty different medals and badges that he obtained at GAR conventions and meetings. These medals and badges offer colorful and complex examples of medallic art.[43]

Scheffer belonged to the Acker Post of the GAR in St. Paul, one of the most active posts in the state. At its peak it had about 600 members. The Acker Post held regular meetings, which included the occasional lecture, entertainment activity, or excursion. The post also conducted charity work in the community and for fellow veterans.[44] Along with other Acker Post members, he attended the 1884 National Encampment of the GAR in Minneapolis. Scheffer’s ledger entries list arrangements he made for printing tickets and programs (with Brown & Treacy, a long-time St. Paul printer), providing transportation for the group, and hiring George Siebert’s band to play. Attending national encampments was more expensive in terms of train fare, meals, and lodging. Scheffer went to seven other such encampments: Portland, Maine, in 1885; San Francisco (1886); St. Louis (1887); Boston (1890); Pittsburgh (1894); Louisville (1895); and Buffalo (1897). For the Portland encampment, he purchased the proper GAR uniform (the price was $20.60 or approximately $500 dollars in 2011$). The benefits, presumably, were worth the expense, since the encampments enabled him to make contact with comrades who later became friends, as well as business partners.

In the fall of 1893, Scheffer served as treasurer for a committee tasked with bringing the GAR’s national encampment to St. Paul the following year. The project failed, but the lobbying efforts of St. Paul members of the GAR met with success at the 1895 Louisville Encampment when St. Paul was selected over Buffalo, Denver, and Nashville as the next host city. The St. Paul Encampment attracted over 150,000 visitors, and probably was the largest such event ever held in the community.[45] Perhaps in recognition of his service to the organization, Scheffer served as a member of the executive committee of the GAR for 1896.

Albert Scheffer was also a proud member of the Military Order of the Loyal Legion. The fraternal organization, whose membership was limited to Civil War officers, was established shortly after the assassination of President Abraham Lincoln, and was patterned after the Society of the Cincinnati, which had been organized following the Revolutionary War for American and French officers who served in the conflict. Scheffer was a charter member of the Minnesota Commandery of the Loyal Legion, joining the chapter on May 7, 1885. Not surprisingly, he served as the commandery’s treasurer from 1885 until he left St. Paul for New York City in 1899.

“Scheffer! Scheffer!”

Scheffer’s involvement in various civic committees in St. Paul and his personal connections to city leaders likely influenced him to enter the field of politics. As with his decision to pursue a career in banking decades earlier, he followed in the footsteps of his older brother, Charles. Charles Scheffer had served as the founding president of the First Bank of Stillwater, Minnesota, and he was elected treasurer of Washington County and later the state of Minnesota, serving in the cabinet of Governor Alexander Ramsey from 1860 to 1863.[46] Thereafter Charles was very active in business and civic affairs in St. Paul until his death – by suicide – in 1875. Charles Scheffer’s funeral cortege was perhaps the largest the grieving city had ever witnessed. Some 600 carriages followed the casket through St. Paul streets to Oakland Cemetery.[47] Albert Scheffer’s political aspirations appear to have manifested just as his older brother’s career ended tragically.

The younger Scheffer stood for election to the St. Paul school board in 1875 and served until 1878. He also won election as a senator to the Minnesota state legislature from 1887 until 1891. At that time, the Minnesota legislature was essentially non-partisan. During his time in the state senate, Scheffer sponsored a piece of legislation called the “drunkard’s law.” Under the new law, public drunkenness was deemed a crime and three such convictions would mean a jail term. Both temperance campaigners and some brewers supported the bill. The New York Times even wrote about the legislation, suggesting that it would bring “a surprising reform in the saintly city, especially among the better class of citizens and the youth who are wont to carouse at night.”[48]

Scheffer was a fine extemporaneous speaker, an important asset for a politician, as a correspondent for the St. Paul Daily Globe noted in 1881. Scheffer had addressed a meeting of the visiting sharpshooters (a Schützenverein). He spoke in German and “no man in St. Paul is his equal in those off-hand speeches.” His comments in the speech were often “interrupted with uproarious laughter and loud applause.”[49] In 1880, Irish patriot Charles Parnell made a fundraising tour of America, seeking financial aid for his starving countrymen. After stops in Detroit, Chicago, and Milwaukee, Parnell came to the Twin Cities. He appeared at the St. Paul Opera House on 26 February. Albert Scheffer was among twenty-five city leaders seated on the platform. Scheffer began his speech by saying that he had tried to make a German out of William Dawson, his business partner of seventeen years, but instead Dawson (by then St. Paul’s mayor) had made a fairly good, average Irishman out of Scheffer. “And I begin to think that no meeting of Irish Americans is complete unless I am with you, gentlemen,” he continued. Scheffer then praised the Irish as singers, soldiers, and, above all, outstanding citizens of St. Paul, naming Bishop Ireland, James J. Hill, and Michael Doran among his examples, to great applause.[50]

Scheffer’s status as a German-born, Civil War veteran, and a supporter of Irish causes, garnered him many votes within the city of St. Paul, but he faced a much greater challenge winning support in other parts of the state. He discovered this problem when he launched an unsuccessful bid in 1884 for Minnesota’s Fourth Congressional District, which included large swaths of rural territory outside St. Paul, and a failed run for the governor’s office in 1888.

In 1886 four candidates had vied for the Republican nomination for Minnesota governor: Charles R. Gilman, Andrew Ryan McGill, John Gibbs, and Albert Scheffer. One of many Minnesota politicians who came from Pennsylvania, McGill was a lawyer and the state’s insurance commissioner.[51] McGill won the nomination and beat the Democratic nominee, Mayor Albert Alonzo Ames of Minneapolis, by 2,600 votes. McGill’s election platform included imposing high licensing fees on saloon owners ($1,000 per year in cities of over 10,000 people) in order to curb drunkenness and challenge the power of Democratic ward bosses who provided patronage for their supporters through their control of local saloons. He secured passage of the legislation in 1887. One of the strongest supporters of high license fees was then Bishop John Ireland. William Watts Folwell commented that, while license fees did reduce the number of saloons, those that remained were controlled by distillers, brewers, and liquor dealers. “More than ever the saloon became the sphere of political activities and a convenient place for insnarling the venal vote.”[52] Despite the legislative achievement, McGill was not re-nominated to run in 1888; this time the viable candidates were William Rush Merriam and Albert Scheffer, both bankers from St. Paul.

In the 1888 gubernatorial race, Scheffer’s fine oratory and endorsements from the Fifth District Farmers’ Alliance and the Ramsey County Democratic Committee were not enough to secure victory at the Republican nominating convention. Scheffer hoped that the endorsement from the nominally independent but left-leaning Farmers' Alliance’s would put pressure on the state Republican Party to nominate him as its candidate out of fear that he might defect to the Democratic Party. “Personally ambitious, Scheffer accepted the Alliance reform program and even the Democratic [P]arty’s tariff and temperance position in the hope of winning the election.”[53] However, the endorsements from the Farmers' Alliance and the Ramsey County Democratic Committee proved confusing to many observers. Was Scheffer a Democrat or a Republican? Or did he intend to run as an independent? Newspaper writers asked him to declare his political allegiance during the summer of 1888. Finally he issued a letter of explanation that generated even greater criticism. Writing to the Ramsey County Democratic Committee, Scheffer thanked them for the honor of instructing their delegates to place his name in nomination at the Democratic Party’s state convention. It was an honor, he wrote, but he was a Republican seeking nomination as the Republican gubernatorial candidate, and it would “not be manly” to accept both nominations. The Pioneer Press headlined the letter: “The Sphinx Speaks and like the Ancient Oracle, His Utterances are Clothed in Obscurity.”[54] Even the New York Times picked up the story, characterizing Scheffer’s letter as a “milk-and-water-betwixt-and-between” response. “It promises nothing, it says nothing, and it commits its writer to nothing.”[55]

A cartoon on the front page of the July 29, 1888, issue of the Pioneer Press highlighted Scheffer’s predicament. In the illustration, Scheffer seeks an elusive prize, the nomination, while balancing precariously on two planks labeled Democratic and Republican. While Scheffer was nominally a Republican, he believed it was opportune to espouse the Democratic position on certain issues. He hoped that this would help him gain a competitive edge in the contentious nominating process. In truth, what Scheffer really needed was better campaign organization and the “boodle” that other candidates possessed. It was rumored, although not investigated, that William R. Merriam’s campaign workers had spread their boodle wisely and widely. According to the Pioneer Press, “It is said that the Merriam men brought [to Minneapolis] over $5000 to be used discretely [at the Republican convention], but no one claimed to have received it.”[56] In a draft letter that Scheffer prepared but never sent to the editor of the Pioneer Press, he wrote that he deemed it his duty to remain in the fight and “defend the un-purchased nomination which I have received from the [R]epublicans of this county and accept defeat if it comes in the spirit of Napoleon’s proud general who exclaimed, ‘All’s lost but honor!’”[57]

At a meeting of Scheffer supporters in the lobby of the Merchants Hotel, Colonel Robinson of Big Stone County said, “If Scheffer is nominated he will sweep the state like a cyclone.” Loud cries of “Scheffer! Scheffer!” went up from the crowd, and, “amid the wildest enthusiasm, Albert took the platform.” He began by saying that he had been introduced so often as the next governor that it was becoming “somewhat stale.” He told the crowd not to judge him by what the Pioneer Press said, but to ask “the laborer on the streets of St. Paul about Albert Scheffer.” He was sure that the answer would be favorable or he would withdraw his nomination bid.[58]

The nomination campaign was contentious and the convention was even worse. The liquor interests openly supported Scheffer, a fact cartoonists emphasized. One drawing showed Scheffer’s face appearing through a mug of beer. Writing about the convention, reporter Harlan Page Hall referred to the busy Scheffer political headquarters in the Merchants Hotel. He noted that “The state was deluged with literature in all languages, and up to that date the most active preliminary campaign ever seen in the state was conducted by Mr. Scheffer and his friends.” Hall concluded by saying that “it was the most interesting convention ever held in the state, and especially startling owing to the methods resorted to for success.” Hall meant not only the Scheffer campaign materials, but the very active vote buying and trading by county delegations at the conventions.[59] In the end, Scheffer was badly defeated, receiving only 116 of the 224 votes necessary for nomination.[60] In his biography of Ignatius Donnelly, historian Martin Ridge notes that “more than likely because Republican leaders had spent huge amounts of money organizing hundreds of political clubs and had shrewdly estimated the waning strength of the [Farmers'] Alliance, they rejected Scheffer and nominated William Rush Merriam” instead.[61] After the convention, Scheffer was often asked if he would campaign for Merriam (who would continue the string of Republicans elected as governor of Minnesota). He refused, although he did agree to speak for the national Republican ticket. Scheffer said that he didn’t approve of his opponent’s tactics in winning the nomination. “I am out of politics now,” Scheffer told reporters, “and will confine myself to attending to the affairs of the bank of which I am president.”[62]

After the 1888 Republican convention ended, George Henry Hazzard, president of the St. Paul Real Estate Board, gave Scheffer some advice. He wrote:

Now for the future. You are too nice a man to be in politics. You are not politician enough and I hope as a friend that you will see some way to drop it unless it might be that you are taken up and nominated spontaneously, like you were for the senatorial fight two years ago.[63]

Scheffer seems to have taken Hazzard’s advice, as he did not seek nomination for state office in future elections. He did, however, assist friends in their political campaigns. Financial contributions to his brother-in-law, Peter Joseph Dreis’s, campaign for the St. Paul school board are listed in his ledgers. Other unspecified assistance went to William Drew Washburn, selected as a U.S. Senator by the Minnesota legislature in January 1889, in what had been characterized as a “corrupt process.”[64] Washburn wrote to Scheffer that:

I now feel that I cannot express to you, in language sufficiently strong, the deep obligations I am under to you for my ultimate election as U.S. Senator. Without your kindly and hearty co-operation, it seems to me now, as though my election would not have been possible.

Hoping that some time in the future I may be able to show in some practical way what I have said above is sincere and from the heart, I remain,

Truly your friend.[65]

Ultimately, Scheffer’s foray into state-wide politics proved disappointing to him. Shrewd entrepreneur that he was, though, he leveraged the contacts that he made in the 1888 gubernatorial race for business purposes. His dealings with George Sprague of the Minnesota Farmers' Alliance led to the founding of the Hekla Fire Insurance Company two years later. Perhaps, Scheffer decided that business represented a safer bet with greater rewards than politics.

Conclusion: “All’s Lost but Honor”

As this glimpse into the life of one of St. Paul’s pioneer German-American businessmen shows, his financial career was fraught with problems. The failure of financial institutions was commonplace during the era, but with the assistance of friends and family, Albert Scheffer continued to pursue new ventures, undoubtedly hoping that real estate, or insurance, or other investments would bring him the affluence and security that he desired. Unfortunately, they never did. It is perhaps ironic to note that Scheffer’s final attempt to grow his fortune involved the manure of sea birds.

One might logically inquire whether Scheffer was dishonest in the course of his muddled and sometimes bizarre business ventures or whether, instead, he merely took inappropriate risks. A survey of Scheffer’s existing records does not reveal evidence of intentional dishonesty on his part. Furthermore, Scheffer’s actions should not be judged from the vantage point of twenty-first-century standards of commercial behavior. Instead, Scheffer’s entrepreneurial career must be contextualized. Capitalism was mostly unbridled in the second half of the nineteenth century in the United States. There was little or no governmental regulation to protect the investor, and the relatively new, unsophisticated state legal systems of the era were not always sympathetic to investors, buyers, or shareholders. Business matters were not overly transparent. Risk-taking was accepted and often encouraged by the dominant culture of the era, and Scheffer certainly did that exceedingly well.[66] He was not the only prominent Minnesotan to act in this manner. A recent book written by a descendant of one of Scheffer’s political rivals, Senator William Drew Washburn, outlines a similar life story with political and financial successes culminating in bankruptcy.[67]

Scheffer appears to have been motivated primarily by his family and social obligations. He was concerned with providing for his wife, his children, and the children of his deceased brothers. He was active in the German community of St. Paul and in statewide and national fraternal affairs. He knew all of the important people and leveraged his relationships with them to the hilt. He was quite generous with his time in organizing, supporting, and attending important civic and cultural affairs. These matters clearly drew upon his limited finances as well. The city of St. Paul and many of its citizens respected his dedication and expressed outright affection for Scheffer, which, in turn, led to unquestioning financial support for his many business ventures. Only in the years after his death would political reformers attempt to better regulate the economy in order to create a fairer and less risky playing field for shareholders, investors, and entrepreneurs.

Notes