The rise and spectacular fall of Iowa’s first millionaire

Benjamin Allen’s Terrace Hill Dream and Banking Downfall

Iowa’s first millionaire built a palace, then lost it all. Benjamin Allen came to Des Moines as a teen orphan in 1848 to claim his uncle’s money.

Soon after, he grew rich as a merchant and banker.

When the Panic of 1857 hit, Allen saved local shops by backing their loans, turning a tiny town of 200 into a city of 4,000. At his peak, he spent $250,000 on Terrace Hill, the state’s most lavish home.

But his luck ran out when he gambled with railroad trust funds. His Chicago bank crashed in 1875, and trials followed.

Though he beat the charges, Allen had to sell his dream house for just $60,000. Today, Terrace Hill stands as a monument to Iowa’s greatest boom and bust story.

Orphaned Teen Arrived in Des Moines with Big Dreams

Benjamin Franklin Allen was born in Indiana in 1829 and lost both parents by age four. He grew up with his grandfather in Ohio until his teens.

At 17, he joined the military before moving to Des Moines in 1848 as a 19-year-old with big plans. Allen came to collect money his uncle Captain James Allen left him.

Captain Allen set up Fort Des Moines in 1843.

Though Allen had little schooling, he became Iowa’s first millionaire with a fortune of 4-12 million dollars at his peak.

From Small-Time Shopkeeper to Banking Powerhouse

Allen started as a simple merchant in 1848 and quickly jumped into many business deals including part-ownership in a sawmill.

By 1855, he began banking and buying real estate, grabbing 34 acres that included the future spot for his dream home. Two years later, Allen became a director of the State Bank of Iowa and took over the Bank of Nebraska.

People trusted his “Bank of Nebraska” paper money as much as Illinois currency.

Local Hero Saved Businesses During Financial Crisis

During the money crisis of 1857, Allen kept many local shops open by signing notes promising to cover their debts if needed. This bold move won him lots of goodwill and made him a hero in Des Moines.

By 1860, Allen helped turn the small settlement from just 200 people into a growing town of nearly 4,000.

His land holdings grew to at least 93 square miles across Iowa, with over 1,100 property deals in Polk County alone.

His Grand Mansion Plans Reflected Soaring Ambitions

In 1866, at the height of his wealth, Allen hired famous Chicago architect William W. Boyington to build Terrace Hill.

He picked an amazing 29-acre site from about 17th Street to 29th Street, with the Raccoon River and present-day Grand Avenue as borders.

Building began in 1866 and cost $250,000, making it the most expensive home in Iowa. Boyington was also building the Old Chicago Water Tower while designing Terrace Hill.

Railroad Money Proved Too Tempting to Resist

In 1867, when trains reached Des Moines, a court picked Allen to hold more than $500,000 in Chicago Rock Island and Pacific Railroad bonds in trust.

Allen bought land along the planned railroad route west to the Missouri River and created a land company. He mapped out town sites and stations along the route, selling them for big profits.

But Allen started using the railroad trust money for his own deals, a choice that led to his downfall.

The Allen Family Moved Into Their Palace in 1868

The Allens moved into Terrace Hill during summer 1868 with their three children: Kathryn (Kitty), age 12; Frank Jr. , age 5; and Bessie, age 2.

Their youngest child, Harry, was born at Terrace Hill in 1869, completing their family of six. The 18,000 square foot mansion had modern features including a 90-foot tower with great views of Des Moines.

The house had 20 rooms with steep roofs, open porches, narrow paired windows, and fancy eaves.

Seven Hundred Guests Attended the Lavish Housewarming Party

On January 29, 1869, the Allens threw a huge housewarming party to celebrate both the mansion’s completion and their 15th wedding anniversary.

Seven hundred guests from across the country came to see this stunning show of wealth. Allen spent $8,000 on food, flowers, and entertainment (worth more than $180,000 today).

The menu included 25-pound fruitcakes, ice cream shaped like George Washington, turkeys in colored jellies, and oysters, with music from two pianists and singers.

A Last-Ditch Banking Gamble Failed Spectacularly

In May 1873, with huge debts from borrowing railroad trust funds for investments, Allen made a desperate move to save himself. He bought controlling interest in Chicago’s Cook County National Bank and became president.

Allen tried to prop up the bank with his personal money and assets.

Despite his efforts, the bank crashed in January 1875, wiping out Allen’s entire fortune in one crushing blow.

Eight Years of Court Battles Couldn’t Save His Fortune

Two criminal fraud trials dragged on over eight years, with one case reaching the United States Supreme Court. Allen avoided conviction because juries believed he had put his own money into the bank trying to save it.

Many local people felt the same way despite losing money themselves, seeing Allen as a victim of bad luck rather than a crook. Legal fights over Allen’s bankrupt estate continued until the mid-1880s.

The Fallen Millionaire Clung to His Dream Home

Despite going broke, Allen kept Terrace Hill and eight acres of surrounding grounds until 1884.

During his money troubles, he tried to sell Terrace Hill to the Presbyterian Church as the main building for “Allen University.”

The Presbyterian Church firmly said no, leaving Terrace Hill covered under a blanket mortgage. Terrace Hill survived possible teardown thanks to protection from creditors during the long bankruptcy process.

Iowa’s Greatest Real Estate Bargain Changed Hands for Pennies on the Dollar

On May 9, 1884, Frederick Marion Hubbell and his wife bought Terrace Hill from the bankrupt Allen for just $60,000.

This was only one-fifth of the mansion’s original $250,000 construction cost, making it one of Iowa’s best real estate deals ever.

Hubbell had carefully built his wealth through the Equitable Insurance Company and other ventures while Allen’s empire fell apart.

The purchase marked the transfer of financial power from Iowa’s first major success story to its most enduring business dynasty.

Visiting Terrace Hill, Iowa

Terrace Hill at 2300 Grand Avenue in Des Moines tells the story of Benjamin Franklin Allen, Iowa’s first millionaire who built this expensive mansion before losing everything through railroad fund misuse and banking collapse.

Tours run Tuesday-Saturday at 10:30am, 12pm, and 1:30pm from March through December. Adults pay $5, kids 6-12 pay $2, and children 5 and under are free.

You must reserve 48 hours ahead by calling 515-281-7205. They only accept cash or checks.

This article was created with AI assistance and human editing.

Read more from this brand:

• Iowa’s vanishing effigy mounds and the 73-year-old who saved them
• The Arizona Hopi village erased by its own chief: Awatovi’s dark fate
• Martin Van Buren quit the Democrats to fight slavery at age 65 via the Free Soil Party