Editing Watertown, Wisconsin (section)

===City railroad bond default===
Growth of the city was substantially hampered when Watertown issued almost half a million dollars in [[Bond (finance)|bonds]] to support the building of two railroads to town to encourage further growth: the Chicago & Fond du Lac Company and the Milwaukee, Watertown & Madison Road.<ref>Ben Feld, "[http://www.watertownhistory.org/Articles/CityGovernment101.htm City Government 101]" in Ken Riedl (ed.), ''History of Watertown, Wisconsin''.</ref> The success of the plank road convinced residents that a railroad would be even more beneficial, and bonds were issued from 1853 to 1855. The Milwaukee and Watertown Railroad, as it was called before it extended to [[Madison, Wisconsin|Madison]], was completed in 1855, only the second line in the state.<ref>M. Wyman. ''The Wisconsin Frontier.'' Bloomington: Indiana University Press, 1998.</ref>

Soon after, in the [[Panic of 1857]], the two railroads went bankrupt. The bonds were sold by the original investors to out-of-town speculators at a small fraction of their face value. Since the railroads were never built and did not produce revenue, the city was unable to pay off the bonds. Moreover, the city did not feel compelled to do so because the creditors (those who held the bonds) were not only from out of town, but weren't even the original holders. Yet the creditors exerted so much pressure on the city to pay off the bonds that Watertown effectively dissolved its government so that there was no legal entity (the government as a whole or officers) that could be served a court order to pay or appear in court. The case was not resolved until 1889, when it had risen all the way to the [[Supreme Court of the United States]], which essentially dismissed the case of the creditors. A small amount remained to be paid, and this was not paid off until 1905, half a century later.<ref>[http://www.watertownhistory.org/Articles/Railroad_Milwaukee_and_Watertown.htm Milwaukee and Watertown Railroad]. Watertown History.</ref>