CENTRAL ISLAND IMPROVEMENT COMPANY

CENTRAL ISLAND IMPROVEMENT COMPANY. The Central Island Improvement Company was organized January 23, 1857, with a capital of $2,100,000. It became the owner of two islands with a total of twenty-eight acres and with enough shallows to make a total of sixty acres when filled in. Its boundaries extended from the line of the Harbor Company on the south to the line of the Harbor Improvement Company on the north. Its design was to make a levee the whole extent, to fill all the intervening lands and sloughs and to run First, Second, Third and Fourth streets to the Mississippi. The corporators were Jesse P. FARLEY, Franklin V. Goodrich, Austin J. Goss, Robert C. Waples, Christopher PELAN, Robert M. Walmsley, Alexander Anderson and Frederick E. BISSELL.

When the Central Island Company bought the islands, they assumed the Corkery loan of $100,000, the Jesup loan of $20,000 and agreed to pay the city $80,000 in ten years with 10 per cent interest — in all $200,000. The company in 1858 notified the council that it would be unable to meet the interest on the bonds. The city held a mortgage on the property for $80,000, leaving $120,000 not provided for by mortgage. Against the proposition for the city to take back the property of the Central Island Improvement Company, 400 citizens demonstrated.

         As predicted, yesterday witnessed the consummation 
         of the scheme of plunder long known as the 'Central 
         Island proposition.' The company and the members of 
         the council in their interests (B. B. Richards, 
         Franklin Hinds, Robert Mitton, Samuel Virden,N. Nadeau) 
         have at last succeeded in binding the city of Dubuque
         to pay the debt which two years ago Jesse P. Farley, 
         F. V. Goodrich, A. J. Goss, F. E. Bissell, R. C. Waples, 
         R. W. Walmsley, C.Pelan and A. Anderson bound themselves
         honorably to pay. Nay, more, by the villainy of these 
         members of the city council the city is now made to pay
         $120,000 and interest amounting at least to two-thirds 
         of the purchase money for one-third of the property
         then purchased for $200,000. Neither Jesse P. Farley 
         nor any other man in the city can justify the manner 
         in which the company then obtained the property ; but 
         bad as it was it was righteous and honest compared 
         with the present plunder scheme." 
               Express and Herald, March 11, 1859 
         Gentlemen, I wash my hands of the whole Central Island 
         fraud and shall enter my protest against it."
               Mayor Hetherington. 

It was openly charged that the mayor was not sincere in this statement and that he secretly favored the transaction.

The Central Island case involved the following points: (1) The city sold the company island property; (2) the company gave the city its bonds for the property; (3) the individual members of the company endorsed the bonds; (4) the city put its guaranty on the back of the bonds; (5) the bonds were sold to outsiders; (6) no interest was paid on the bonds; (7) the company became insolvent, but its individual members were rich; (8) these individuals, to save themselves, bought up the bonds at about 25 cents on the dollar; (9) the city had warranted the title to the company; (10) Jesup & Co., who held a prior mortgage on this island property, foreclosed the same and the property was sold to H. L. Stout, who secured a deed. The island company now contended that the city was bound to take care of the mortgage, because the title had been warranted and therefore now sued the city for $33,000. This amount the city finally agreed to pay, partly because in doing so it could secure a withdrawal of the suit for $550,000. In the suit on the guaranty the Supreme court decided that the city had no power to make the guaranty and therefore the decision was in its favor.

The case was not settled until 1875. The Central Island Improvement Company surrendered all the bonds they continued to hold amounting to $43,000 and gave the city indemnity against any of the liability on the remaining $8,060. The city received a deed to about 21 acres of the Central Island property. All suits pending were dismissed at the cost of the parties bringing them. The city was to issue the company $35,000 of twenty-five year six percent bonds.

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Source:

Oldt, Franklin T. History of Dubuque County, Iowa. http://www.ebooksread.com/authors-eng/franklin-t-oldt/history-of-dubuque-county-iowa-being-a-general-survey-of-dubuque-county-histor-tdl/page-13-history-of-dubuque-county-iowa-being-a-general-survey-of-dubuque-county-histor-tdl.shtml

"Settlement of the Center Island Suits," Dubuque Herald, October 19, 1875, p. 4. Online: https://news.google.com/newspapers?nid=uh8FjILnQOkC&dat=18751019&printsec=frontpage&hl=en