Schoolchildren swarm through Minneapolis' Mill City Museum. The youngsters don aprons and white chefs' caps for a baking lesson, gawk at an old freight car that once brought wheat into the mill, bounce and squeal as they peer from the observation deck at the Mississippi River, St. Anthony Falls and the Stone Arch Bridge below.

The museum occupies the ruins of the Washburn A Mill. It stands next to the new home of the renowned Guthrie Theater and just down the road from where workers scramble to repair the torn roof of the Metrodome.

Founded by Cadwallader C. Washburn in 1866 and joined by "Honest" John Crosby in 1877, the Washburn-Crosby Co. for well over a century ground wheat from Minnesota and the Dakotas into flour, using the waterfalls as its source of power. (This marked the first commercial hydroelectric operation in North America. There's a small hydro plant adjacent to the falls that still operates today.) Washburn-Crosby became the core of General Mills Co. in 1928.

"Washburn figured out how to mill flour," says Laura Salveson, the museum's director. "It was a technological breakthrough when it happened, just as important as technology is today." The result, she says, changed the course of an entire industry, the farmers who surrounded it and households across America. "Minnesota spring wheat became the best flour in the world."

In the early years of the 20th century, some two dozen flour mills populated the banks of the Mississippi near what is now downtown Minneapolis. Scores of factories and warehouses colonized nearby blocks to service the industry. That's where the Mill City moniker came from, and that's what gave the Minneapolis economy its initial boost. Built in 1874, the Washburn A Mill for many years held the title of the largest flour mill in the world before rival Pillsbury Flour Mills Co. built a larger one. Pillsbury's old mill stands just across the river on the opposite bank.

"We predate Minneapolis," says Tom Forsythe, the ebullient vice president of corporate communications of General Mills, which acquired Pillsbury 10 years ago in a move that liberated the former rival from the European combine Diageo plc. Forsythe points to one of Washburn A's grinding stones, which now occupies a nook in the main corridor of company headquarters, about eight miles west of the old mill. "The reason Minneapolis is here is because we're here."

This kind of linkage is more than just a fascinating historical footnote or the subject of a field trip. It suggests one of Minnesota's great strengths, although rarely articulated. This is an economy with an awfully long institutional memory, deep roots and a bushel full of some of the most senior corporations in America.

"Long-standing companies have been here forever," says Charlie Weaver, the executive director of the Minnesota Business Partnership, an association of chief executives. That's critical, he says, because they form the state's business foundation and "they spin off so many other companies as well."

Corporate longevity and stability have important ramifications not only for the state's economic health. They also reflect and help promote Minnesota's high degree of civic responsibility and involvement. A stable corporate terrain translates into a more tethered workforce, which in turn means a more stable environment in general.

"There's a real pride in what we have here," says William York, the CEO of St. Paul-based AgriBank FCB. He's speaking about both his bank, which dates back to 1916 and which eventually presided over the merger of three other regional agricultural credit banks, and the Twin Cities in general. "There's more than business reasons to be here [in the Twin Cities]. It's an anchor."

The Twin Cities of Minneapolis and St. Paul embrace one of America's most diverse economies. This metropolis hosts everything from UnitedHealth Group Inc., America's largest medical-related insurance concern, to Mall of America, the country's largest retail mall.

This diversity to some degree reflects the state's long-standing independent streak, which is part cultural and part geographical. The Twin Cities form the urban core and economic center of a region of America termed "the Upper Midwest." This includes Minnesota, Iowa and the Dakotas. A largely rural buffer separates this metropolitan area from other major cities. "Ours is a very self-contained economy," says Thomas Crosby Jr., 72, a prominent lawyer, whose parents merged the Pillsbury and General Mills families through marriage. "We're not under the shadow of New York. We're not under the shadow of Chicago."

Others say there's something even more basic at work: Minnesota's educated, stable workers support and underpin economic well-being and diversity. "Fortune 500 companies aren't here because of the weather or the Twins or the Vikings. It's the workforce," says Arthur Rolnick, former head of research at the Federal Reserve Bank of Minneapolis. He's now senior fellow and co-director of the Human Capital Research Collaborative, a partnership between the University of Minnesota's Humphrey School of Public Affairs and the Federal Reserve Bank of Minneapolis. "They work long hours. They work hard. That's what business wants."

Economic diversity is often cited as one important reason why this metropolitan area of 2.85 million, which for those keeping track ranks 16th in the U.S., almost always enjoys higher employment than just about any other major American city. In March, the metropolitan area's unemployment rate was 6.8%, two full percentage points less than the national average, according to the Bureau of Labor Statistics. Of the major cities, only Washington came in with better numbers.

While other metropolitan economies report anemic recovery, the Twin Cities have strengthened nicely. "It looks like we're in an expansion mode, with output more than the previous peak," says Toby Madden, regional economist at the Minneapolis Fed. He hastens to add, "That expansion isn't growing as fast as you'd like," echoing the grumbling of others here. "Jobs are still in a recovery mode."

In economic terms, Minnesota doesn't quite sprint, but it does keep on trucking. "This economy is less cyclical. We don't have booms as high or busts as low as in other areas of the country," says Timothy DeVries, managing general partner at private equity house Norwest Equity Partners. "It keeps us on an even keel."

Maturity plays an important role. Minnesota claims 20 Fortune 500 companies, the highest per capita of any state. Half are at least 80 years old, of which seven can trace their origins back 100 years or more. In addition to General Mills, that centenary list includes manufacturing mainstay 3M Co., retail giant Target Corp. (the old Dayton-Hudson department store chain) and Thrivent Financial for Lutherans, a low-key financial services supermarket, with revenue last year of $7.5 billion and more than $200 billion in insurance and assets under management. Even the Twin Cities' acknowledged high-tech leader, medical devices behemoth Medtronic Inc., is no kid. It was founded in 1949.

The youngest of Minnesota's Fortune 500 heavyweights is electronics superstore Best Buy Co., which incorporated in 1983, although under its former name, Sound of Music, it dates back to 1966. United Healthcare, whose revenue last year eclipsed $94 billion and tops the Minnesota-based public companies revenues hit parade, was incorporated in 1977. "These are global companies. They could be based somewhere else. But they started here. And they've stayed," says York.

The state's biggest private companies boast the same kind of extensive history: hotelier, restaurateur and cruise ship owner Carlson Cos., which began life in 1938 as the Gold Bond Stamp Co.; convenience store operator Holiday Cos., founded in 1928; windows and doors maker Andersen Corp., which opened for business in 1903.

Then, there's the granddaddy of them all, the food, agriculture and commodities behemoth Cargill Inc., which is headquartered in a nondescript complex in the town of Minnetonka, west of Minneapolis. Forbes magazine estimates Cargill is America's largest privately held company, with $110 billion in revenue. Cargill opened its first grain storage facilities in the immediate aftermath of the Civil War.

Leading professional and advisory firms have storied pasts as well. Investment bank Piper Jaffray & Co. traces its Minnesota roots back to 1895. Norwest Equity Partners in May marked its 50th anniversary, which in private equity terms is an eternity. The state's two biggest law firms are Faegre & Benson LLP and Dorsey & Whitney LLP. Faegre & Benson just celebrated its 125th anniversary; Dorsey & Whitney will mark its centennial next year.

"We grew up as a law firm representing these early industrial companies, many of which are still around in one form or another, and that's one of the reasons we've been around for as long as we have," says Bruce Engler, who heads Faegre & Benson's mergers and acquisitions practice and who moved to "the big city" from his native Iowa in 1979. "Long-term institutional clients contribute to the stability of the law firms and to our longevity."

Read through the roster of top companies, and Minnesota's corporate endurance is apparent. If anything, there's even more historical cohesion in this economy than meets the eye. Take adhesives company H.B. Fuller Co. The founder started his St. Paul-based wallpaper paste business in 1887, migrating from Chicago to take advantage of Minneapolis-ground flour, the basic ingredient of paste in those days. Fuller sourced his flour from that same Washburn-Crosby mill. His first acquisition came in 1892, when he bought rival Minnesota Paste Co. H.B. Fuller went public in 1968.

H.B. Fuller continues to stick close to its adhesives core. "We've veered very little, other than into new market segments, either geographic or with new applications," says current president and CEO Jim Owens.

H.B. Fuller remains based in St. Paul, with about 500 of 3,300 employees worldwide populating the headquarters complex. However, Owens stresses that his is "very much a global company, with a large majority of sales outside the U.S.," and manufacturing plants scattered all over the world. Last year, revenue totaled $1.36 billion. The company has acquired four small companies in the past two years, one each in Egypt, Malaysia, Germany and Ohio.

Some linkages are even more obscure. The Twin Cities support more than 20 hedge funds. One big source of this talent is Cargill, which has an entire division managing financial risk. In 2003, Cargill split off its proprietary trading arm into an independently run subsidiary called Black River Asset Management LLC, which now claims more than $5 billion under management and includes private equity and emerging-markets trading.

Owens came to H.B. Fuller and to St. Paul in 2008, after working in jobs for almost a quarter century from New Jersey to Great Britain. He was struck, he says, by a sense of civic involvement both among his employees and others. "You sense it from the first day you arrive," Owens says.

"When a new CEO comes to town, he or she is practically met at the plane by the United Way," says Crosby, whose own civic activities have included stints as chair of the Walker Art Center and the Minnesota Orchestra. Crosby retired from Faegre & Benson in 2008 after 42 years, although he still practices law. He also serves as mayor of Medina, an upscale suburb 20 miles northwest of Minneapolis. "The culture of the community," says Crosby, "ensnares" corporate executives and professionals.

"Minneapolis has some characteristics of a small town," says James Ulland, a money manager who once served as the state's chief regulator, formally known as the commissioner of commerce. "By integrating people more quickly into the community, there's a higher level of attachment to the community."

Manageable size can be an advantage. It can also get in the way. The area lacks the high-tech cachet or streaking dynamism of a Silicon Valley or Route 128. It suffers from a relative dearth of venture capital. The University of Minnesota is one of the country's great land-grant institutions, but it doesn't seem to produce the number of technology-related entrepreneurs of its peers, except in medical devices. Weaver, for one, says that the Twin Cities could do a better job of holding on to fast-growing small and medium-sized companies.

"There's a lot of foment below the surface," agrees Robert Rosenbaum, the Minneapolis managing partner at Dorsey & Whitney.

Despite a reputation for economic diversity, the Twin Cities suffer some major gaps in their corporate résumé, especially in technology. Once home to mainframe and supercomputer stalwarts Control Data Corp. and Cray Research, the Twin Cities came down on the wrong side of the computer wars in the 1980s. It failed to maintain a significant information technology presence after Cray went bankrupt and Control Data was divided up and its remnants acquired. (A Seattle-based company acquired the name Cray and maintains a small engineering presence in St. Paul.)

"As an IT base, it's not what it was 20 years ago," says John Whaley, Norwest Equity Partners' managing administrative partner, although he hastens to add: The economy as a whole "has always been resilient."

On the street outside Whaley's office, there's a sense of rebirth as well. On the first genuinely warm spring day, office workers in downtown Minneapolis bask in some welcome sunshine. They wander past a farmers market that occupies part of a pedestrian-friendly downtown street called Nicollet Mall. Many eagerly settle in on sidewalk tables and chairs.

The IDS Tower, Minneapolis' tallest skyscraper, lords over the city from its vantage point just off the mall. On the 49th floor, Crosby shows a visitor around a complex of offices that house a number of retired executives and professionals and afford breathtaking views of the terrain. As he makes the circuit, Crosby points to various city lakes, cultural institutions and sports fields. The far more modest skyline of St. Paul squats nine miles away. A flat expanse spreads out to the area's numerous suburbs and, further in the distance, some of America's most fertile farmland.

The Twin Cities area "doesn't have street appeal until you stop to look at it," says Crosby, whose father started Norwest Equity Partners and whose great-grandfather on his mother's side founded Pillsbury. "There's a huge, huge element of understatement out here. ... This isn't a place where people try to outdo each other."

With a few exceptions (see Ventura, Jesse, "the Body"), Minnesota residents aren't a boastful bunch. That helps explain why the metropolis still suffers from the reputation of a frozen tundra populated by a bunch of self-effacing people with odd, Swedish-sounding accents, Mary Tyler Moore and Prince. In this age of instant and ubiquitous communication, the Twin Cities continue to be quaintly referred to by residents as one of the best-kept secrets in urban America. "It's the hardest market to recruit into. It's the hardest market to recruit out of," says Jeff Werbalowsky, Minneapolis-based co-CEO of the investment bank Houlihan Lokey Inc.

Werbalowsky is a hard-core convert. By choice, he says, he moved to Minneapolis from Los Angeles and stresses he could have lived anywhere in the U.S.

To set the record straight, it really does get cold in Minnesota. It snowed this year in late April, and some stray snowflakes fell the first two days of May. But as Werbalowsky suggests, oddly enough, that's part of its appeal.

After railing against a cold, wet spring that has followed a freezing, snow-filled winter, Werbalowsky explains how grateful Minnesotans are for a bit of warmth and sunshine, and how much they take advantage of it. "When there are five days of crazy weather and then one day of nice weather, you really appreciate it."

"Livable" and "family friendly" are favorite words folks bat around here. Although the Twin Cities aren't immune to pockets of poverty and urban blight, sylvan neighborhoods dot both Minneapolis and St. Paul, not to mention innumerable suburbs. Schools are good, at least in most areas. Housing is relatively affordable and stable. The Twin Cities didn't experience the dizzying gains in residential real estate. Neither did they suffer steep declines.

Minnesotans complain about the long winters, but revel in the seasons. The percentage of commuters who bike to work in Minneapolis is second only to Portland, Ore. Werbalowsky is one of them.

The Minneapolis-St. Paul area maintains a wide array of top-rate and financially secure cultural assets. Professional sports thrive as well, no matter how much the Minnesota Vikings threaten to leave unless they get a new stadium.

Having a robust roster of well-established and homegrown companies in the forefront of public life is critical to civic health, most everyone agrees. Target's name, for example, is emblazoned on both the Minneapolis downtown professional basketball arena and the city's new Twins ballpark, a fastball throw away.

Along with 3M, Target's distinctive logo is also prominent outside Orchestra Hall, just down the street from where the retailer located its headquarters. The building complex, completed just two months after the Sept. 11 attacks, houses up to 6,000 employees. These workers are often young and single, and they've given downtown Minneapolis a major shot in the arm. "Target doubled down in Minneapolis," says Rosenbaum, admiringly. "It was a huge statement for the business community."

While companies and their executives lead this civic charge, employees form frontline support. "There are expectations of civic engagement," says the MBP's Weaver. "It's not if, but what."

For the Twin Cities to remain stable and expanding economically, coming out on the right side of mergers and acquisitions is important. "It's a fragile relationship between these companies and the state, and it needs tending," maintains Weaver, who says it's his job to keep businesses in town. "CEOs almost every day get solicitations to move elsewhere."

The Twin Cities have on balance done well, although the record is still mixed with some stinging losses. "It doesn't go all in one direction," admits Rosenbaum.

Last year Tyco Electronics paid $2 billion for ADC Telecom, a Minnesota presence since 1935. Tyco announced ADC's new Twin Cities headquarters would consolidate and eventually close.

The Northwest Airlines headquarters disappeared after the 80-year-old carrier merged in 2008 with bigger rival Delta Air Lines Inc. Weaver, however, calls the move "more a hit to the Minnesota ego." More critically, he says, Minneapolis remains a major hub, and more than 10,000 Delta employees continue to be based in the Twin Cities.

In 2004, St. Paul Cos., a 150-year-old insurance concern that claimed the title of Minnesota's oldest ongoing business, merged with the larger Travelers Indemnity Co. The new company carried both names for two years before dropping St. Paul from first its name and then co-headquarters status, although it claims 2,700 employees still work in the city.

Honeywell Inc. is inevitably mentioned in chronicling corporate losses. After a period of mismanagement weakened the company under a CEO who, critics point out, never lived full-time in the Twin Cities, Honeywell was acquired by Allied-Signal in 1999 and moved to New Jersey, although the merged name became Honeywell International Inc.

Occasionally, a large company simply forsakes Minnesota. Older residents still fume three decades after Burlington Northern Railroad, which pretty much made St. Paul, decamped for Seattle, seemingly overnight. "It snuck out of town," says Crosby. "That really hurt."

Most corporate pillars, however, remain firmly embedded in Minnesota turf and continue to use the state as a base of expansion. "In Minnesota, Fortune 500 companies have been acquirers, rather than acquirees," says Ulland.

On May 18, for example, General Mills announced that it would spend €810 million ($1.15 billion) to buy a 51% stake in French dairy products concern Yoplait SAS, best known for its yogurt. (General Mills had the license for decades to make Yoplait in the U.S.)

Two of the country's biggest and healthiest banks maintain a huge presence in the Twin Cities. U.S. Bancorp traces its roots to the 1929 merger of the First Bank of St. Paul, started in 1853, and the First Bank of Minneapolis, founded four years later. Still based in Minneapolis, U.S. Bancorp employs more than 9,500 in the Twin Cities.

While Wells Fargo & Co.'s corporate headquarters remained in San Francisco after the merger with Minneapolis-based Norwest Banking, many of the other functions are anchored in Minnesota.

Minneapolis also has more than its fair share of investment banks. Piper Jaffray, spun off by previous owner U.S. Bancorp in 2003, leads the charge. Others include Houlihan Lokey and Lazard Middle Market LLC, the old Goldsmith Agio Helms operation that Lazard Ltd. acquired in 2007.

The number of private equity firms that call Minneapolis their home, however, suffers in comparison to the figure for Chicago or even Cleveland. "There is no one here to do really big deals, at least not alone," says Van Zandt Hawn, a co-founder and the managing partner of private equity firm Goldner Hawn Johnson & Morrison Inc., which opened for business in 1989. Hawn adds that while the Twin Cities are "sparsely populated with larger PE firms ... lower-middle-market firms like ours keep sprouting up, so I don't think the metro area is underserved in that respect."

Norwest Equity Partners remains by far Minnesota's largest and most dominant player. Its latest fund totals $1.2 billion. A $500 million mezzanine fund is also active. NEP stresses its Midwestern origins. "We find a lot of great opportunities in our backyard," says Norwest Equity's Whaley.

"There's some affinity for those selling businesses to go to Midwestern private equity rather than those in other cities," adds Hawn, whose firm split into two last year.

Both Medtronic and the smaller St. Jude Medical Inc. are technology mainstays in the Twin Cities. Both are acquisitive, although some analysts have criticized Medtronic in particular for not making more transformative buys. Last year, for example, Medtronic paid $123 million for Osteotech Inc., an Eatontown, N.J.-based marketer of bone and tissue for transplants. It also paid $370 million for ATS Medical Inc., which makes products for cardiac surgery from facilities in nearby Plymouth, Minn. ATS executives came from St. Jude.

If you rank the sectors in the Minnesota economy, manufacturing, transportation, services, government and retail are all significant. But to understand historic continuity, food and agriculture provide a useful filter. The statistics vary. According to the University of Minnesota's College of Food, Agricultural and Natural Resource Sciences, food and agriculture account for 22% of the state's exports, the single biggest sector.

But this understates the sector's importance. It doesn't just represent the region's roots, but some very contemporary economic drivers. "It's the underlying strength [of this region] and it's stable," says AgriBank's York, whose low-key bank, which services farmers, sits on $80 billion in assets and last year turned a profit of $1.5 billion. "The Upper Midwest was the breadbasket to the country. Now it's the breadbasket to the world," says Peter Janzen, senior vice president and general counsel at Land O'Lakes Inc., the $11 billion dairy and feed cooperative based in St. Paul.

According to the Agricultural Utilization Research Institute, a nonprofit funded by the Minnesota state legislature, agriculture accounts for 22% of state export and almost 20% of the state's "overall economic activity."

Agriculture is a "very productive sector," says economist Madden. "It impacts transportation. It impacts warehousing. It impacts food and manufacturing. It impacts wholesalers. It impacts retailers."

It helps that commodity prices are sky high these days, with livestock, dairy and area crops such as soybeans and corn prices extremely strong.

Even venture capital is getting into the act. "Agriculture, food and animal science is showing a real resurgence," says John Deedrick, the managing director of Rochester, Minn.-based Linn Grove Ventures LLC, a new life sciences fund, which is looking for agriculture-related startups in Minnesota and the Dakotas. "With the addition of capital, this area is going to explode," says Deedrick, who once led the Mayo Clinic's venture arm.

Those in the Twin Cities often don't fully appreciate food and agriculture's importance in the state economy. "We're sitting on the edge of the Middle East of agriculture," says Whaley, likening Midwestern grain to Mideastern oil. "People don't understand that."

That's not surprising, replies Whaley's colleague, DeVries: "Medical devices is sexier than corn."

Fully one-third of Minnesota's Fortune 500 contingent is food-related. General Mills is the best known, especially after the merger with Pillsbury combined Cheerios and Wheaties with Green Giant and Häagen-Dazs, not to mention the Doughboy with Betty Crocker. But it isn't the largest. That honor goes to $40 billion supermarkets holding company Supervalu Inc., followed by CHS Inc., a little-known energy, grains and food company with 2010 revenue of $25.3 billion and net income of $500 million.

Also in the contingent are dairy products stalwart Land O'Lakes; Nash Finch Co., America's second-largest foods wholesaler; and Hormel Foods Corp., the more-than-a-century-old company that made Spam famous -- the meat, not the junk e-mail. Finally, there's fertilizer maker Mosaic Co., which in May spun out from parent Cargill.

Land O'Lakes, founded in 1921, illustrates the well-grounded but low-key nature of some of the top companies here. "As a value proposition, Land O'Lakes created the standard identity of butter as we know it today. ... We're known as an innovator, a trend setter," says Janzen, but "we have that historic sense."

Janzen, whose charge also includes mergers and acquisitions, says part of the challenge is adding value to that historical legacy as it provides returns to its 5,500 co-op and member associations, which form the shareholder base. He cites the $230 million acquisition of the Purina feed business in 2001.

Minnesota is also home base for several other major privately held food companies with impressive billion-dollar revenue numbers but little recognition outside the state. In addition to Cargill, that list includes frozen-foods specialist Schwan Food Co., meatpacker Rosen's Diversified Inc. and Michael Foods Inc., an eggs and potatoes products concern.

Poultry producer GNP Co. exemplifies the state's deep roots. It created the Gold'n Plump chicken, which in Minnesota is the brand equivalent to New York bagels. (A classic commercial portrays Minnesota chickens as parachuting defenders of the state against "the invasion of the Southern chicken.") The company was founded in 1926 by E.M. Helgeson in St. Cloud, Minn., 65 miles northwest of Minneapolis, and is now run by third-generation CEO Michael Helgeson. Last year, revenue topped $300 million.

Helgeson says that despite record revenue and continued marketing that emphasizes the company's local roots, GNP fights a disconnect between consumers and producers. "As people are further removed, they lose that connectedness to what farmers do," he says.

So GNP emphasizes its ties to more than 300 family farms in Minnesota and Wisconsin that grow the chickens, many of the farmers themselves second- and third-generation suppliers to GNP. The company inaugurated the vegetable-fed, antibiotics-free "Just Bare" product in 2008, which allows consumers to trace a package back to an individual farm.

"Consumers want to know where their food comes from," says Helgeson.

Then there's Maud Borup Inc., a 104-year-old startup. In 2006, a former buyer for Target named Christine Lantinen bought the candy maker, which started life in 1907 behind a flower shop in St. Paul and was to be liquidated. Lantinen closed retail outlets, jobbed out production and concentrated on selling products to mass retailers. She's snagged Target and Wal-Mart and increased sales from $150,000 when she took over to an expected $15 million this year.

Lantinen is now negotiating to buy a building in her hometown of Le Center, Minn., population 2,500, where her father owns a farm and where she plans to centralize assembly and packing.

Lantinen's latest project is also a return to roots. She will begin producing compostable Easter eggs, a product she unveiled to great acclaim at the New York Toy Fair this year. The eggs are made of cornstarch. Lantinen expects local farmers to provide the raw material. "So Minnesotan," she says.

See related story, "Milling flour the old-fashioned way"