By 1887, iron ore was discovered in lands north of the town of Tower, which were purchased by a syndicate of East Coast financiers. This syndicate, which included H.H. Porter of the Union Steel Works and the Rockefeller family, wanted to purchase Tower's railroad in order to extend it to their lands. Tower initially refused. The syndicate implied that they would construct a second railroad alongside that of Tower and compete directly. Tower had no control over the shipping lines that carried his ore from Two Harbors to points east, and many of these companies were under the control of the same East Coast iron and steel magnates who were involved in the Minnesota syndicate. Faced with these challenges, Tower divided his properties into two parts, the mine and the railroad. He said that any potential buyers had to purchase both. In late 1887, Tower sold his Minnesota Iron Company holdings to the syndicate, retaining a small interest in the subsequent company, called the Minnesota Mining and Railroad Syndicate.