In December 1856, Henry Rice presented an enabling act to Congress that would allow Minnesota to begin the process of becoming a state. He based his proposal on Minnesota’s rapid population growth. The bill easily passed the House of Representatives, but the Senate was another story.
Its introduction sparked a firestorm of debate. Northerners were eager to add two senators to bolster the number of free states, while Southerners feared losing influence for slave states. Kentucky Senator John Thompson argued that new states would be too costly for the federal government, citing the need for roads, canals, and forts. After intense debate, the enabling act passed on February 26, 1857.
When Minnesota officially became a state on this date in 1858, the land between its western border and the Missouri River became an unorganized territory, with little government oversight or support. Settlers were not eager to move to what was known as the “Great American Desert.” They were discouraged by stories of hostile Indigenous tribes, a harsh environment, and a lack of established communities. Land speculators, however, painted a much brighter picture, promoting the future Dakota Territory as a paradise that only needed formal organization to thrive.
The Dakota Land Company was formed in 1857, with its main office in Sioux Falls, then part of Minnesota Territory, but soon to become unorganized territory. The company created two “paper towns” that existed only on paper. Great Oasis and Saratoga had no residents, yet boasted numerous officials holding nonexistent positions and collecting large salaries. Lots in these imaginary towns were sold at inflated prices. Land purchased for $1.25 an acre was resold to unsuspecting immigrants for as much as $15 an acre.
St. Paul became a center of speculation. Many speculators had political connections and influence in government, and they pushed for the creation of an organized territory. President James Buchanan established Dakota Territory on March 2, 1861, as one of his final official acts. The move, however, did not save the Dakota Land Company.
The company had staged fraudulent elections with nonexistent voters and claimed control over the territory. The scheme unraveled when the 1860 census revealed a total population of just 2,376 residents. When the company folded, it had only $25.10 left in the bank.
Dakota Datebook written by Dr. Carole Butcher
Sources:
- Grant K. Anderson. “The Politics of Land in Dakota Territory: Skirmishes – 1857-1861.” State Historical Society of South Dakota. 1979. https://www.sdhspress.com/journal/south-dakota-history-9-3/the-politics-of-land-in-dakota-territory-early-skirmishesa1857-1861/vol-09-no-3-the-politics-of-land-in-dakota-territory.pdfAccessed 4/20/2026.
