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While the beauty of St. Anthony Falls attracted explorers and tourists as early as the 1700s, it was the fur trade that initially brought European-American settlers to this remote area and it was the power of the falls that made them stay in the area that would become Minneapolis, Minnesota. They knew they could use the weight of the falling water to turn waterwheels that, in turn, used a variety of shafts, belts, and pulleys to operate saws initially for timber milling until flour milling gradually took over. The Falls came under U.S. control with the Pike Treaty of 1805 when the Sioux Nation granted the United States, for the purpose of the establishment of military posts, nine miles square at the mouth of the river St. Croix, also from below the confluence of the Mississippi and St. Peters, up the Mississippi, to include the falls of St. Anthony, extending nine miles on each side of the river. In 1819, the U.S. Army 5th Regiment of Infantry arrived at the junction of the Mississippi and Minnesota Rivers to build the northwest link in this chain of forts and agencies. Here, where traffic could be controlled on two major rivers, Fort Snelling was completed in 1825 on the west side of the Mississippi River. In 1838 the east side of the river was opened for European-American settlement. Franklin Steele, a storekeeper from Fort Snelling, was first on the scene. Staking out his claim for about one-half mile of east-side shore land, Steele soon controlled half the waterpower at St. Anthony Falls.
In 1849 Robert Smith, a Congressman from Illinois, acquired a mill site on the west side of the Mississippi. In 1851 the west side was opened to settlement by European-American immigrants, but settlers were not granted title to the land until 1855. In 1856-58, Steele, Smith and numerous partners joined forces to build the main channel dam. Independent corporations developed the waterpower of their respective riverbanks making the power of the falls available to factories lining the canals. The first canal was built on the west side by the Minneapolis Mill Company. Flour mills soon became the dominant business. By the 1880s, 27 mills produced more than two million barrels of flour annually, making Minneapolis the nation's largest flour manufacturing center.
At the same time, 3,000-30,000-acre "bonanza" wheat farms were appearing on the flat, fertile prairies of the Red River Valley. Like the mills, these farms, with their large work forces, modern farming equipment, and single crop, were efficient industrial enterprises.
Growing large crops of wheat could only be profitable if there were high-production flour mills willing to buy it and a relatively low-cost method of getting it there. Nor was there any profit to be made in building a large flour mill without both sufficient quantities of wheat and a way to get it to the mill. The railroads provided the link that made both farmers and millers successful. They carried raw materials to the mills, finished products to the farmers, and flour to consumers all across the nation.