The Development of Dupont Circle: Government Corruption and Shady Real Estate Dealings

The 1870s began with great optimism about the prospects of Washington, DC's economic and physical growth.  In August 1872, the Board of Public Works, under the leadership of Alexander Shepherd, diverted and buried Slash Run that made the Dupont area a huge bog, awarded a contract for the first concrete pavement to be laid anywhere in the city on Connecticut and Massachusetts Avenues.  Connecticut Avenue suddenly, and without any apparent reason, became a twenty-four-foot-wide concrete roadway, flanked by aspen trees and running from Farragut Square to and around Dupont Circle, and from there west on Massachusetts Avenue to the city boundary at Florida Avenue.  

Alexander Robey Shepherd.  Author's Collection.

Just prior to Shepherd's improvements to Connecticut Avenue, the "Pacific Syndicate" (note that Dupont Circle was originally named "Pacific Circle") with close ties to Shepherd, began snatching up real estate along Connecticut Avenue from Farragut Square to Dupont Circle.   The syndicate's principle investors were Curtis Hillyer, Senator William Stewart, and Thomas Sunderland, all of whom had made their fortunes in silver mining in the west after the Civil War.  Through real estate agents Hallet Kilbourn and and Matthew Latta and within a period of five or six weeks between May and June of 1872, they purchased property in the area amounting to about $600,000.  Sunderland’s interest in these purchases was one-half, and Hillyer's and Stewart's interests were one-quarter each.  Sunderland made additional purchases for himself, amounting to about $150,000.

In early 1873, any optimism for the city's prospects was dashed.  In February of that year, Congress enacted the Mint Act, which made the switch to the gold standard, demonetizing silver. Western miners labeled this measure the “Crime of ’73.” The move started a long, slow contraction of the nation’s money supply and the so-called Long Depression, which began that year and lasted until 1879.  Gone were the days of huge fortunes being made through silver mining and selling it to a guaranteed purchaser, the federal government. Fortunes made from gold and copper would soon replace those from silver in Washington.  William Stewart would spend the rest of his days trying to reestablish the use of silver in backing U.S. currency, ultimately leaving the Republican Party for the Silver Republican party in the 1890s.  Curtis Hillyer became an outspoken advocate of bimetallism (use of both silver and golds as the currency basis) and “Free Silver” as well.  Of the syndicate members  William Stewart was most affected by the financial crisis and was forced to sell his interests in the syndicate to Sunderland, making Sunderland the largest land owner in the Dupont neighborhood. 

At this point, what the Pacific Syndicate needed to protect their investments were clear signs of development to invoke confidence and encourage the sales of the lots they had collected.  Shepherd, Stewart, and Hillyer would start the process themselves in hopes that others would follow.  Stewart and Hillyer would build on the north end of the improved Connecticut Avenue and Shepherd on the southern end of it. In September 1873, President Grant appointed Shepherd to succeed Henry Cooke as governor of the territorial government, a move that Shepherd construed as a mandate to continue his citywide improvements and prospects seemed to improve for the group. 

Adding a false air of government approval and officiousness to the development scheme, Bureau of Public Works architect Adolf Cluss was commissioned to design homes that would bookend the Pacific Syndicates holdings.  Shepherd commissioned Cluss to design three magnificent Second Empire–style homes that would border the north side of Farragut Square at 1701 to 1705 K Street, which became known as “Shepherd’s Row.”  Cluss would also design William Stewart's home, "Stewart's Castle," at the northern-most point of the syndicates holdings.  

Architect Adolf Cluss, ca. 1860s

Shepherd purchased the end house on the corner of K Street and Connecticut Avenue at 1705 K Street for himself. It was the largest of the three and included a great salon that ran the length of the house, a spacious ballroom and a grand staircase. It was ideal for Shepherd’s large parties. Hallett Kilbourn took the house on the other corner, and Adolf Cluss took the center house for himself. 

Shepherd's Row, circa 1880. The Shepherd Mansion is on the left.  Library of Congress.

1873 was not finished creating problems for the Pacific Syndicate.  Only five days after Shepherd became governor, the banking firm of Jay Cooke & Co. declared bankruptcy, causing a worldwide financial panic. with the country began slipping into the Long Depression. Building construction was halted, and real estate values plummeted. Kilbourn and Latta’s real estate pool lost Jay Cooke & Co. as its financial underwriter and suddenly found itself with a large amount of land on its hands that they could no longer finance and with no one interested in buying it.  Their holdings decreased in value to the point that they were no longer worth the amount for which they were mortgaged. Thomas Sunderland sold the properties that he held outside the real estate pool to Senator John Alley, who later sold them to Nevada senator and William Stewart’s political rival, William Sharon, for a huge profit. 

In 1874, the territorial government was abolished and replaced with a presidentially appointed three-member Board of Commissioners.  Shepherd was investigated by a congressional committee for financial mismanagement during his time as chief of the Board of Public Works.  Shepherd was found not guilty of any level of corruption, but was accused of cronyism and jobbery.  He was forced to start renting out his grand house in 1874, and in February 1876 he filed for bankruptcy that included the sale of the house.

Adolf Cluss testified before a Joint Committee in May 1874 and his appointment with the Bureau of Public Works was revoked by the President almost immediately afterwards.  He returned to private practice where he built almost 90 buildings including at least eleven schools, as well as markets, government buildings, museums, residences and churches.  In addition to Stewart's Castle, his additional work in Dupont Circle after leaving the Bureau of Public Works included Phillips Row between 1302 and 1314 Connecticut Avenue in 1878 and at the same time a home for Samuel Perry “Powhatan” Carter next door at 1316 Connecticut Avenue. 

Hallet Kilbourn.  Author's collection.

Kilbourn and Latta were subjected to Congressional investigations for years concerning their connections to Shepherd, the Bureau of Public Works, and the Pacific Syndicate.  At one point, Kilbourn was jailed for being in contempt of court for refusing to testify before one of the committees.  Kilbourn and Latta continued together as partners in the real estate business for another five years, but in 1878 Kilbourn sued Latta for doing business on the side and not disclosing it and sharing the profits.  The case went on for years, and in 1893 made its way to the Supreme Court, where it was remanded to the lower courts that had ruled in Latta's favor.  Yet, the case became a legal precedent for legal business partnerships and is still cited today.  

In 1881, Sunderland and Hillyer sued Kilbourn and Latta for fraud, claiming that in buying properties for the Pacific Syndicate, they purchased or secured lots at one price and then falsely reported the actual purchase prices as higher when seeking reimbursement from the syndicate and pocketing the difference.

Hallett Kilbourn continued to deal in real estate and banking and expanded his interests into the newspaper business, purchasing the Washington Critic and the Republican, as well as some dabbling in railroads.  But by 1898, Kilbourn started to suffer from insanity. His family said he had been very depressed for six months by financial troubles, which he had imagined to be worse than they actually were. He made several attempts at suicide. The first attempt was by taking a mixture of chloroform and morphine. In his second attempt, in full dress suit, he turned on gas, took about half an ounce of morphine, saturated his cloths with chloroform and wound them tightly about his head and then lay down on the lounge and waited to die. On the third try, he simply tried to jump from a window of his Shepherd's Row home. On the advice of close friend Senator William Stewart, his wife and daughter had him committed to St. Elizabeths Hospital, the District’s public psychiatric institution, where he died in 1903 at the age of seventy-two.

Regardless  of the reasons and means by which he tried to accomplish it, Alexander Shepherd created a new forward-looking city infrastructure, which ultimately paved the way for the rapid development of the Dupont Circle neighborhood during the 1880s.  

Updated: Feb. 7, 2021