Staunton spectator. [volume] (Staunton, Va.) 1849-1896, 1889-09-25
How Malone feathered his own nest at the
expense of the State.

expense of the State.
The Norfolk Landmark says that, after
the war, the first important thing General
Malone did for himself was to secure the
presidency of the Norfolk and Petersburg
railroad. The State of Virginia at that
time owned, in the three railroads extend.
ing from Norfolk to Bristol, over six mil
lion, two hundred thousand dollars interest,
secured by first mortgage on the property.
In 1867 General Malone secured the pas
sage of bill by the Legislature consolidat.
ing the three roads under the name of the
"Atlantic, Mississippi and Ohio" and au-
thorizing the sale of the States interest,
for State bonds at par, to the new compa'
ny. The company never made the purchase,
but upon the assembling of the Legislature
of 1S70-71-a Legislature which Mahone
had elected along with Governor Walker
he began scheme to get possession OF the
six million, two hundred thousand dollars
for nothing; and accordingly bill was
passed in June, 1870, transferring all the
States interest to Mahone's company for
1000, 900, to be paid in State securities in
installments of five hundred tn ousand dol
lars year, the first payment to be made
in 1885 by the company. The transfer was
to be Immediately made, and interest on
the debt should not begin until 1880. 1t
was provided also that the State should
swap her first mortgage for a second mort
gage to secure the $4,000,000, and this
should come in behind first mortgage for
Sis, O0O, 600, authorized to be borrowed by
the A., NJ. & o. road.
Note the beauty of that scheme.
1t was accomplished, and. General Ma
hone made his first mortgage for about
S12, 100000.
His next step was to fail and turn the
company over to receiver appointed by the
United States Court who, as compelled to
do, sold the road, finally, for less than
enough to pay off the first maortgog and
the State of Virginia thusiost, and through
her the people of Virginia lost, absolutely,
the u7sole of the Sc, 2O0,O 900 interest in that
property.
The road was reorganized, after sale,
with Malone left out. In 1888, after Ma
hone had turned Readjuster Malone Re-
publican, and had Governor and Legisla-
ture under his control, he induced the
Board of Public Works of the State to &C.
cept 100000 from the newly organized
company, for the surrender fOrecer Of all
claim that the State had, or might have,
against the road, in law or equity.
So that, to borrow the language of the
Portsmouth Enterprise Times, the account
of Malone stood thus:
The State issued Sc, 267, $50 of bonds, and
the interest on them from 1870 to 1888,
thirteen years, at six per cent per annum
amounted to $4,SS8, 429.40. Let us sum
this up
Principal. fO,Z0I ,<oUOt
Interest," ................ "a. 1888, Al
Total. ...........,... .... 81, 500 A
Deduct. observation-disclosures. ........ 5C0,0 .0(
and this balance of $40, 655, $50, 40 is what
the Stato OF virginia lOst py Ine lnHuence
of General Malone with her legislation.
The action of the Board of Public Works
may have been the best thing the State
could do at that stage, as she had nothing
but her good will then to sell as an equity
The foreclosure Of the first mortgage left
her without legal status.
In the course of these transactions Gen
eral Malone received ALL of his large salary
from the railroad, and in addition enough
stock in the new organization to amount ir
cash, when sold, to over 100000.
This was naturally the end of the Gen
erals railroad fnancierlng. He then turn
ed his attention to the REIMBURSEMENT OF the
State debt, which he had thus INCREASED
BY THE OUTRIGHT DESTRUCTION OF ovEI
TEN MILLION AND A HALF DOLLARS avail
able assets.
The Riddleberger bill was the settlemen
which resulted from his success in political
ly upsetting and demoralizing the people o.
Virginia.