Frac Mines and Fioshay

tumafeature“Never has an investor of the company lost any money. All your money-All the time-On time.”
Wilbur B. Foshay
August 25, 1929*

Why is it we Minnesotans keep falling for the same schemes over and over? Long before Tom Petters, Minnesota’s most famous flimflam man was none other than Wilbur B. Foshay. He started working in the newly burgeoning electrical and gas utilities industry as a young man from New York. By the time he arrived in Minneapolis in 1914 at the age of 36, he had already started to construct his utility investment empire. He had teams of salesmen hawking bond issues and stock deals in his conglomerate of utilities that stretched from Canada to Nicaragua, including utilities in twelve U.S. states in between. He also boasted ownership interests in hotels, factories and wholesale ventures.

By 1926, Foshay Companies was flourishing with promises of big dividends and the commissioning of the construction of a new monument to their success – a skyscraper office building in Minneapolis. It would be the tallest skyscraper west of the Mississippi. On August 25, 1929, the building had its opening dedication with an audacious celebration that lasted three days. It included a parade led by a band playing a song specifically commissioned for the event by John Phillips Sousa, the “Foshay Tower Washington Memorial March”. Event participants included all the governors from the states, several Canadian providential premiers, and some Latin America presidents.

Only a few months later, in the aftermath of the 1929 stock crash, would the reality of Foshay’s ponzi scheme come to light. The grand office building in Minneapolis would go into receivership and be sold to pay off only a small portion of the company’s obligations.  In 1934, Foshay was convicted and ordered to Leavenworth Penitentiary to serve his time. His promises of riches materialized only into a mess that the government was forced to clean up.

Another get rich quick scheme that has vexed this great state for a number years comes from the claims of easy wealth from a mineral extraction economy. Once again promises of great riches are being sold in Minnesota. What is interesting this time is that it is not just the copper/nickel mining near the Iron Range, but also silica sand mining in the bluff country of southeastern Minnesota. The issues and struggles around the expansion of silica sand mining played out in our political theater we call the State Capitol at a hearing last Tuesday in front of the Senate Environment and Energy Policy Committee. 

The explosive growth of demand for silica sand comes from it being used in a new oil and gas extraction process known as fracking. In the oil and gas industry, it is known as frac sand for its quality in creating fractures in shale rock, allowing for release of previously inaccessible oil and gas reserves. It is what has led to the oil boom in North Dakota, and this is where most of the new sand mining projects are shipping their materials. The new industry that is booming in the area is promising great wealth and prosperity, but the risk to the community’s health and safety are major concerns in the long-term for many in these communities. Several counties and local governments have been scrambling to understand the long-term impacts to groundwater, air quality, road maintenance and public safety.

These industries move quickly to stay ahead of regulations, arguing that they intend to be good neighbors. All good intentions aside, many citizens down in the southeast corner of Minnesota have serious concerns about the environmental and health impacts of these mining projects. Even the Commissioner of the Pollution Control Agency (PCA), John Linc Stine, is having deep concerns. He recently told Winona County officials to take a deliberate look at two proposed mining projects by doing an environmental impact statement. Typically in the past, local control of regulation for gravel mining has been sufficient, but the exploding demand for this kind of sand cries out for a regional solution. Typically pressure from mining companies causes the individual counties and cities in the region to eventually slouch to the lowest common denominator as they compete for jobs in these situations.

Therefore, a more well thought out regional approach that seeks to ensure that there are sufficient protections against negative environmental and health impacts while insuring that sustainable mining jobs are available for the whole of the region is necessary.  Wabasha City Councilor Lynn Schoen said it best when she was recently quoted in Politics In Minnesota: “We need a state permitting process in addition to our local conditional use permits to make sure we mitigate some of the damage that is sure to come our direction . . . We need a statewide moratorium so we can establish this permitting process.”

Tuesday’s hearing was only an informational hearing, but bills calling for a regional solution will likely be introduced next week. Years ago Minneapolis was left with a monument to misplaced priorities in unsustainable financial excess we now know as the little Foshay Tower. Hopefully with the foresight of such leaders as Schoen and many others who came to the Capitol to call for a sustainable regional approach, southeastern Minnesota will not be left with environmental hazards strewn across its landscape as their monuments to unsustainable mining excess.

*Thanks to Elizabeth Johanneck, one of my favorite Minnesota history writers, and her book Twin Cities Prohibition that retells the Foshay story so eloquently.

About John Tuma

John is a former state legislator and litigation attorney. He served in the Minnesota House of Representatives for eight years from the Northfield area, beginning in 1994. Elected as a Republican, John was known for his independent thinking and ability to work across party lines. He is well-known in Minnesota state government circles.
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