Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1871-05-03
THE RAILROAD LEASE.

lease OF Jle N8snVlue anu -OtCaLur Tt8u
road, J. W.. Sloss ESQ.,, President Of
that company, asked permission to read
for the information of the court the re.
port to be submitted to the stockholders
in their meeting at Pulaski, on Thursday
next. The court, eager to gather all the
information possible about matter of 30
much interesting Importance, readily as
scented to the reading of the report,
which is as follows: saloal o5
The President and Directors very re-
spectfully present the stockholders of the
Nashville and Decatur Railroad Company,
with the lease of your road as proposed
| by the Louisville and Nashville Railroad
Company for your consideration.
They offer the following brief COM
ments upon 1t: -, s.. 5.-.l--.- e--.s 5-s
l. Its history and the causes that have
brought it about. sier,E -.f e.asr
| 1t is well known to almost every stock
holder that it has always been understood
that the prosperity, if not the salvation
of your company depended upon the ex.
tension of the road south from Decatur
to the Gulf. This was part of the or.
\ ginsl programme, aud no one ever con.
| templated for moment the idea of the
road stopping at Decatur, for the simple
reason that It was not to be expected
that road running from Nashville 10
Decatur, built largely upon credit,
would be self-sustaining - certainly
not remuneratiye in the way of dividends
to the stockholders, and consequently all
our plans and calculations have been
based upon the expectation that this ex-
tension would be made, and Its importance
has been made more apparent since the
war than before for the reasons
l. l. That the close of the war left you
in far worse condition financially than
at the commencement; and,
2. The rapid construction of Compel
ing lines has deprived you of large por-
ton of your business and reduced your
earnings to a point 50 low as to make it
very difficult to keep your road in good
repair, and pay the interest upon your
debt, and, it has been difficult to prevent
| your road, like many others in the State
of equal advantages, from passing out of
your hands, and, but for the liberal policy
adopted by the State of Tennessee toward
| the roads, there is scarcely road In
the s ate that could have been sus-
tanned. This is certainly true as
| to your road. But the policy
of the State has been changed within the
last year. The late State Convention
passed an ordinance prohibiting the grant
ing of further aid to railroads by the
issuance of State bonds, and the General
| Assembly since that time have manifested
q determination by their acts, to deal with
| the roads in the strictest manner, forcing
them either to settle with the State or to
be sold out, and for this purpose bills have
been filed in the courts by the State Com
missioners, against every defsulting
| road in the State. Seeing some two
years ago that this course would be ulti-
mately adopted by the State, the di-
rectory sought to retire their indebted
ness to the State. In this they sue
tceeded, and by this transaction you
made over $500, 900. At the time this
transaction was going on, it was ex-
pected and believed that the South and
North Railroad would be finished
and running by about the LIST of JAN
uary, 1872. This belief was entertain.
i 6O ny oil WIN Az UIGi1
BON after the European war broke out.
The effect of that was in every way
damaging, to that, as well as every other
enterprise of similar character. That
company was relying mainly on the sale
of its bonds Endorsed by the State of Al
ALBANIA TO raise money 10 carry on the
work, and they relied mostly upon Eu-
rope for a market, where they expected
to sell them. The war, of course, pre-
vented q sale of them in Europe,
and so far parslyzed the CONNER
cial world SIS to prevent their
sale at any point. Just before the
war these bonds were worth 973 cents,
and 96g cents was offered for the entire
issue, and refused by the President of
that company. 1t was expected, how
| ever, that with the close of that war
might be expected demand for the
bonds, but in the meantime and i'm
medistely after the war, the question
of reputation by the State of Alabama
spraug up in connection with the Ala
bama and Chattanooga railroad, which
had failed to pay its interest in jan
uary last. The Governor refused
to pay the interest of that company
unless instructed to do so by the Legisla-
ture. Reputation was advocated by q
respectable number of the members of
the Legislature as well as quite num-
Der of the press of the State. The re-
suit of this was to still further depress
the value of the bonds and to render
| them almost Valueless to the COM
| pany in carrying on their work.
| To meet their obligations the South
aud North Alabama Railroad Company
| had borrowed money and had hypoth-
coated their bonds. Under the law
| the bonds could not be disposed of at
less than 90 cents, and if violated, no
other bonds would be Endorsed by the
State. With 100000 bonds by.
pothecated on loan of 81, 800, 600 the
depreciation of the bonds caused by the
war and the question of reputation,
it became necessary for that company
| to obtain some mode of immediate
relief. Consequently they called a
meeting about the middle of March
at Montgomery of all the parties
| interested, and it was ascertained that
they had the means TO finish the road TO
Elyton, but no further, and the question
came up as TO whether they should stop
the road at Elyton or to bring in outside
assistance with view to bring it on to
Decatur. If they brought it from abroad
| it would result in the control of the road
passing out of the hands of Montgomery.
On the other hand if they stopped the road
at Elyton it would not be self sustaining,
and would eventually pass out of their
hands. After great reluctance it was
finally agreed that proposition should
be made to the Louisville and Nash
vile Railroad Company as their first
and only choice to furnish the means
to finish the entire road and pay off
their entire liabilities. This PROPOSE
! ton was made to the Louisville and
Nashville Railroad Company st Louis
vile on the 30th of March and &C
cepted by them upon the condition that
they could become the lessees of the
Nashville and Decatur Railroad or make
other satisfactory arrangements for the
control of that road. Thereupon the
proposition was made to lease your road
and laid before the directory, and aftel
mature elaboration they determined tC
refer the question TO the stockholders anc
called meeting for that purpose on The
4th of May at Pulasky. In the mean
time, however, they appointed conmlt
tee to visit Louisville, and confer With tbs
I,ouisyille and Nashville Railroad Com
pany, for the purpose of obtaining mo
diication of the lease. The result o
their lsbors in the lease which is nov
before you.
That you may fully comprehend tn
situation, you will find below a statemen
of your financial condition on the lst o
March, 1871, to-wit:
BONDED DEBT.
First mortgage bonds. 80, 0,oO0 %
LESS OH O'-'N'' 81, 100000 o
Second mort'ge bonds. 100000 90
| loss on bonds uusold.. All 500 90
L0SS vi JULIUS 1''' 9s,5OO o
Tennessee and Alabama
income bonds........ NOIUV U
Total boaded debt. sa,12s.5O0 Q