New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1874-06-07
Orleans. 40 aaaA Texas
RaflrlAd.

Ae onO ~ 3 A10A AVAIhsy ASSS-S6 ~ 49,
New Orleans Chamber of Commerce, held
90 Monday evening, June ], III g. ". R.
BAyley, chairman of the. committee on
railroads, unlimited the following report:
New ORLEANS, Same l, 1874
To tine President and Mem hers cftte>kew Orleans
Chamber of Commerce:
GENTLEMEx-In response to .yOur call for
information respecting the history and pres
ent status Of ire New Orieans, Mobile and
Texas Railroad Company, tie prospect OF
said company's building q road to Texas,
and what action, if any, ia needed on our
part to expedite the construction ct rail
way to Texas, your committee on railroads
respectfully submit the following report:
Said company was chartered under the
name of the New Orleans, Mobile and
Chattanooga Railroad Company by the
Legislature of Alabama, NoyeMbsc24, 1866,
to construct and operate railroad from
New Orleans, via Mobile, to Chattanooga,
Tennessee. .....-
At the first meeting of the corporate
directors in New York city-Oakes Ames,
| Peter Butler, James A. Raynor, e. W..
Durant and William S. Williams being
present-.he capital stock was fixed at
'ys %, 900, 900. The Legislature OF Louisiana.
by act No. Is, approved August le, 1853,
recognized the company as q corporation IN
Louisiana, and authorized it to extend its
proposed road westward to Texas. About
this time, probably, the company recon-
sAered its project OF building the road to
Tennessee, and began to appreciate the
facilities offering tor the Obtaininent, on q
grand scale, OF State aid from Louisiana.
Tie statement that this company, being
COMPOSED of several Of the most wealthy
men in America, wanted nothing but right
of way and no subscription in, nor State
aid frsm Louisiana, was generally eircu-
lated in New Orleans, but, before the com
meEaeHsnt of construction on the Mobile
division, State aid had been applied for and
obtained, per act No. 26, approved Febru.
airy IL, 1859, providing for the Endorsement
by the State OF the cOmpany's western di-
vision seeaad mortgage bonds.
The estimated cost. based upon surveys
and location of the Mobile division, was
about $4,000, 900, and this amount was Oh
tanned, not by stock subscription, but by
an issue OF ST, 900, 600 Of eight per cent mort
gage bonds, four OF first and four of second
mortgage. with $l,000,000O of nominally
full paid stock certificates thrown in. This
was equivalent to allowing sixteen per cent
interest for n,o1ey to be used in the con-
struction Of the road, and it neeessitated
early completion and generous dividends
afterward; but it was soon found that the
actual cost would very largely exceed the
estimate.
~ Construction began in February, 1869.
and the road was opened for public traffic
between New Orleans and Mobile, Novem-
Der |. 1870. Thenceforward till December
IL, 1871, on account of the Morgan opposi-
ton line, there were no surplus earnings
aud large expenditures were unavoidable,
for the renewal of Teredo destroyed
bridges, sballasting, completion of struc-
lures etc. The expenditures were very
largely in excess of the road's receipts, and,
with no joint stock fund and no revenue
from the road built, the current interest on
the Mobile division bonds could not be paid,
except by sale of Western division bonds,
or by sale OF State securities, to De issued
by the State Of Louisiana, in aid of the con-
structioR of a railway to TeIas.
But in order to obtain these Louisiana
securities it was necessary to build the
road to Donaldsonvile, for by the terms of
the 100000 subsidy act OF February 81,
1870, the completion Of the road from New
Orleans to that point would secure the issue
of $4,000 of State bonds, while the COM
pletion Of forty miles OF road west prior to
the eighteenth OF January, 1871. would Sc
cure the States Endorsement Of $500, 600 OF
the company's second mortgage bonds.
Accordingly, the building of the road
west was commenced at Westwego, opposite
the present western portion of New Orleans,
in May, 1870, and the track laying was COM
pieteu W tHe bayou AaAoUIcHe, d. Donalu-
sonville, May II, 1871, although the road
was not opened for public traffic until
September / 1871. Considerable progress
had been made also in the construction of
the road thence west, twenty-0Ie miles to
Grand river.
The frat forty miles of the road. which,
according to the terms of the guarantee
act, should have been completed not later
than January Is, 1871, were not completed
until about April s. 1871; but clause was
inserted in joint resolution No. 81, approved
April l6, 1871 changing the name of the
which provides that the bonds
stead of every forty miles, of road com.
pleted sin the manner provided for" that |
is, within the time limited.
In July, 1871, $4,000 Of bonds were in |
dorsed, on sixty miles of the road, though |
the distance from Westwego to Lafourche |
is fifty seven miles only, and thus became |
a part of the contingent debt of the State, |
and in August, 1871, $4,000 of subsidy |
bonds were issued to said company. These |
bonds were dated July l, 1870, therefore |
the first two sets Of semi-annual coupons
should have been detached and Cancelled, |
but it is believed they were not, and, in
$i20,000 was paid by the State
for back interest, Though not due to any
one.
But the $l,5O0,0OO State aid on the road
to DonaldsonvilIe was only about equal to
its cost, and therefore it was still necessary
to provide in some manner tor the payment
Of interest on the first mortgage bonds on
the Eastern and Western divisions, which
had been issued. By act No. 95, approved
April 20, 1871, the State issued s., 900 of
d ght per cent bonds to this company for
stock alone. in lieu of its suspensive-cOndi-
tiOnal obligation to guarantee second mort
gage Shreveport Branch bonds, after the
completion Of each forty miles section of
said branch, which, as the company was
already in very embarrassed
condition, it never could have built, and
probably never really intended to Guild.
rund, and without an adequate revenue,
and in road partially built with money
obtained by the issue OF bonds bearing
,ight1per cent interest, two for one, the
State being the only real s.ockholder, can
not be considered as of more value than
This 81 600, 600 so-called stock subscrip-
ion was simply another subsidy" OBJ
aimed under pretense of desire to build
. road to Shreveport. If the Legislature
md executive authorities were really de-
.eived, they were misled; if not, they con-
lived at q fraud. According to the Audi
or's report these bonds were issued April
Il, 1874, but there is no evidence anywhere
# their issue. --r -.-t
1t will thus be seen that this company,
IN the completion of the railroad to Dom
.ldson vile, obtained State Endorsement on
md State bonds for 100000, besides the
mount of $i20,000 for back interest. The
proceeds thereof, your committee believe,
we're used for the payment of debts con-
racted, in. part ar least, for the Mobile
iivis;on of said 5eomOany's road and for
,ayment Of the interest due on the Mobile
livision bonds.
The indebtedness Of the western division
ras ole innroasad u1thnut axtendinr the |