Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1870-05-26
RAILROAD INVESTIGATION.
Report of the Committee ON the
Knoxville and Charleston
Railroad
How the Law was Disregarded
by Gov. Brownl0w and
Others.

How the Law was Disregarded
by Gov. BrOwnl0w and
Others.
The committee find, from an examina-
ton of the records, there was issued 10
this road seven hundred and ten thousand
dollars in the bonds of the State of Ten
nessee, since the war. commencing Jan.
3, 1867, and enaing May Z, 1858.
That three hundred thousand dollars OF
said bonds were issaed uuder she act OF
Dec 10, 1866, and were issued upon
the same penalties and conditions rs the
bonds issued under the act passed Jan.
is, 1866, which requires SHAT the bonds,
in no event, shall be sold at less than
par,n and shat tic proceeds OF said bonds
shall alone be used u building the bridges
and repairing sGid roads, and putting them
in running ORDER The act also IS de-
clared to be amendatory to the internal
improvement law of the State.
The act of Feb. IA, 1852,
provides ''that the company shan
procure bona tide subscriptions for the
capital stock in said company to an
amount sufficient to grade, bridge and
prepare for the iron rails, the whole ex-
tent of the main trunk line, and that said
subscriptions are good and solvent )" also,
''that whenever said companY shall have
graded, bridged, and shsl save ready to
put down the necessary tImbers for the
reception of rails, and fully prepared
section of thirty miles of said road, at
either terminus, in good and substantial
manner, with good materials for putting
on the iron rails and equipments, and the
Governor shall be notified of these facts
hy the affidavits of the Chief Engineer
and President" also, THAT there is no
prior lien existing, before he shall issue
bonds" By theact of Jan. 10, 1886, these
affidavits are to be made by the President
and Treasurer, instead of the President
and Engineer.
The act of 1852 also requires that
'the Governor shall not issue the bonds,
unless on affidavit of the President, and
a resolution of majority of the Board
of Directors for the time being" that
SAID bonds shall not be used for any
''other purpose" than is specified in the
law.
The foregoing are the conditions and
restrictions imposed by the law, that in
the opinion of the committee, applied to
the three hundred bonds issued under the
act of Dec. 10, 1866.
The committee find that one hundred
and fifty thousand dollars of said bonds
were issued under the act passed Dec
z, 1867. The sixteenth section of said
act provides ''that these loans shall be
made in like manner and under the
same conditions imposed by the internd
Improvement laws of the State" and
hence the committee are of the opinion
that all the conditions and restrictions re-
cited heretofore, as imposed upon the
issuance of the three hundred bonds, ap
ply likewise to the one hundred and fifty
bonds issued under the act of Dec. Z,
1867.
That $500, 900 of said bonds were ISSUED
under the act of 1S52-'53-'54, and in
the opinion of the committee were subject
to all the conditions and restrictions i'm
posed by the internal improvement laws
of the State, the principal provisions of
which have heretofore been lecited.
The committee find, from the testimony
of G. w. Jones, that he was President of
said road three years, commencing Nov
81, 1866, and that he had also been di-
rector of the company that the road re-
ceived from the State 40 bonds while he
was President; that he used the same in
the construction of the road; that he sent
said bonds to New York, and that they
were sold by c. Powell, Green s. Co., and
Galloway, Wilson & Co., as he recollects
at about 67 cents on the dollar; that
by the failure of c. Powell, Green
& Co., the company will lose about
$4,000 in State bonds, unless G. Pow
ell pays his note; that he cannot pro-
duce the vouchers for the reason thai they
are in the possession of the company;
that all the proceeds were paid to con-
tractors, and for the use and benefit of the
road, and for the construction, ETC., of
the road, except the amount lost by G.
Powell, Green 6 Co.; that he turned over
all the assets and property of the road to
NJ. D. Bearden, including $4,000 in
BlOunt county bonds, and ia, 900 in
| cash; that the profits of the road were not
sufficient to enable him to pay the interest
| due the State, while he was President;
that he paid the interest out OF other
means than State bonds; that the road re-
ceived, originally, $4,000 in Blount
county bonds, and 100000 in Knox
county bonds.
The committee find from the testimony
/ IS ID Tar,,INan. Hhot h 10
Secretary and Treasurer of the Knoxville
and Charleston Railroad Company, on the
first day of January, 1867, and continued
until the 9th of November, 1868, under
G. w. Jones, President. That he was
again elected Dec. 90, 1869, under NJ. d.
Bearden, Receiver, and is stillin the same
position.
That said road received no bonds from
January, 1867, TO May, 1868; that $50 of
them were sent to New York, for sale,
by order of the President, to be sold
when ordered by the contractors, as pei
terms of contract, and were sold at prices
ranging from 62a to 67t. That e. W.
Jones gave as much time to the business
as was, in his opinion, necessary; that q
portion OF the proceeds of the
bonds was paid to the contractors
by drafts, and was all used ex.
cept $4,000 in bonds, which were
in the hands of c. Powell, Green d Co.,
bankers and brokers, who failed, and the
10 bonds or proceeds of the same wa
lost by their failure; that $304, 943 So il
bonds was paid te contractors; $2S, 00(
in bonds was paid for real estate tina
$205, 75l 80 was paid for railroad iron
chairs, spikes, and freight on same tina
5000 fl in bonds was paid for engine
and cars that $31, 033 % in bonds wa
paid as interest on State bonds or othe
expenses that s110,1 66 rs in bonds wa
lost by Powell, Green & CO.; that the con
tracts were made in State bonds, for tn
reason that the law required the bonds t
be sold at not less than par; and til
1 disbursements were all made in cash
I and then the vouchers reconverte
into bonds for the same reason; that III
cash realized from the sale of the II
bonds was $i53, 203.S4, and OF whic
amount of casa, $40, S37.93 was lost b
c. Powell S Co., and the balance was e.
: pended to various parties, as above STATED
50, 900 in cash Yves paid to the State 8
interest on State bonds. That NJ. /
> Bearden was appointed Receiver on sa
road Dec. /, 1869, and was the first r
ceiver on said ROAD; that the earnings al
receipts of said road from all source
n from the first of December, 1869, to APP
" 1, 1879, was 81, 76S. The disbursement