CHAPTER XVIII_Civil War and Reconstruction in Alabama

RAILROAD LEGISLATION AND FRAUDS

Federal and State Aid to Railroads before the War

For forty years before the Civil War there was a feeling on the part of

many thoughtful citizens that the state should extend aid to any

enterprise for connecting north and south Alabama. It was an issue in

political campaigns; candidates inveighed against the political evils

resulting from the unnatural union of the two sections. South Alabama was

afraid that the northern section wanted connections with Charleston and

the Atlantic seaboard, and not with Mobile and the Gulf; the planters of

the Black Belt wanted the mineral region made accessible; the merchants of

Mobile wanted all the trade from north Alabama; the Whig counties of south

and central Alabama wanted closer connections with the white counties for

the purpose of enlightening them and preventing the continual Democratic

majorities against the Black Belt at elections.

At first it was proposed to build plank roads and turnpikes between the

sections and thus bring about the desired unity. These failed, and then

there was a demand for railroads. There were also other reasons for

internal improvements. Not only ought the two antagonistic sections to be

consolidated, but emigration to the West must be prevented, for thousands

of the citizens of the state had gone to Texas during the two decades

before the war. There was a general feeling that the state only needed

railroads to make it immensely wealthy, and a large "western" element

demanded that the state or the Federal government assist in thus

developing the resources of the state and in uniting its people. During

the session of 1855-1856, though the governor vetoed thirty-three bills

passed in aid of railroads, still the legislature voted $500,000 to two

roads.

However, conservative sentiment, strict constructionist theories,

sectional jealousies, and the knowledge of the sad experience of the

state in other public enterprises[1638] operated against state aid to

internal improvements, and before the $500,000 bonds were issued the act

appropriating them was repealed, thus putting an end to the last attempt

at direct state aid before the war.[1639]

In 1850 Senator Douglas of Illinois began the policy of Federal aid to

railroads by securing the passage of a bill in aid of the Illinois Central

Railroad. The Alabama delegation was then opposed to such a measure, but

Douglas visited Alabama, conferred with the directors of the Mobile

Railroad, and promised to include that road in his bill in return for the

support of the Representatives and Senators from Alabama and Mississippi.

The directors then brought influence to bear, and the two state

legislatures instructed their congressmen to support the measure, which

was passed.

Thus began the Federal policy of granting alternate sections of public

land along a road to the state for the corporation. Later, the grants were

made directly to the corporation. Before 1857, land to the extent of

307,373 acres had been granted to Alabama railroads,[1640] and liberal aid

had also been given for improving the river system of the state.[1641] By

the act of admission to the Union in 1819, Alabama was entitled to 5 per

cent of the proceeds from the sales of public lands, to be used for

internal improvements. Three per cent was to be expended by the

legislature, and 2 per cent by Congress. In 1841 Congress relinquished the

"two per cent fund" to the state to aid railroads and other public

enterprises from "east to west" and from "north to south." The State Bank

failed and the "three per cent fund" was lost, but the legislature assumed

it as a debt and issued state bonds to the railroads to the amount of

$858,498. The "two per cent fund" was loaned before the war as follows:--

To east and west roads $256,438.85

To north and south roads 202,551.02

Balance 52,246.23

-----------

Total $511,236.10[1642]

In 1850 there were two railroads in the state with a total of 132.5 miles

of track, which cost $1,946,209. In 1860, there were eleven roads, 743

miles long, costing $17,591,188.[1643] During the Civil War the roads

received much aid from the state and Confederate governments, though

during this time only a few miles of track were built and some grading

done. At the end of the war all were completely worn out or had been

destroyed. The want of railroad communication with the armies and between

the various sections of the state caused much suffering among soldiers and

civilians, and after the war the people were more than ever anxious to

have roads built. For two years the railway companies were busy repairing

the old roads, but by 1867 popular opinion demanded new roads.

General Legislation in Aid of Railroads

The provisional legislature, on February 19, 1867, passed an act which

served as a basis for all later legislation. The governor was authorized

to indorse its first mortgage bonds to the extent of $12,000 per mile,

when 20 miles of a new road should have been completed, and to continue

the indorsement at that rate as the road was built. No indorsed bonds were

to be sold by the road for less than 90 cents on the dollar, and the

proceeds were to be used only for construction and equipment. The state

was to have two directors, appointed by the governor, on the board of each

road receiving state aid.[1644] The Reconstruction Acts of Congress were

passed a few days later, however, and there was no opportunity for this

law to go into effect.

The first Reconstruction legislature[1645] increased the endowment to

$16,000 a mile, authorized the indorsement of bonds in five-mile blocks

instead of twenty-mile blocks, as before, and to the roads that proposed

to extend outside of the state it promised aid for 20 miles beyond the

boundaries of the state.[1646] The next session Governor Smith, in a

message to the legislature, stated that the indorsement law was

defective; that he was in favor of lending the credit of the state, but

objected to a general statute requiring indorsement of any road; that

there was danger that the roads would depend entirely upon indorsement and

would have no paid-up capital; moreover, taking advantage of the railroad

fever, roads would be built where they were not needed; that aid should be

given only to those capitalists whose enterprises promised success.

Finally, he advised that the law be repealed and aid be given only in

specific cases.[1647]

The legislature responded to the Governor's message by another general

law, practically reënacting the former laws. By its provisions proof was

required that the five-mile block had been built and that the road-bed,

rails, bridges, and cross-ties were in good order, before the first issue

of the bonds was made. The company was to show what use was made of the

bonds. The indorsement was to constitute a first lien in favor of the

state, and in case of default of interest by the road, the governor was to

seize and sell the road if necessary.[1648] A few days later a sweeping

measure was passed, declaring that all acts and "things done in the state"

for railroad purposes were ratified and made legal.[1649] This was the

last general legislation enacted while the railroad boom continued.

Governor Lindsay and the pseudo-Democratic lower house stood out against

railroad legislation, and the indorsed roads were in bad condition when

the next scalawag governor was elected. Under Governor Lewis, in 1873, an

act was passed to relieve the state of some of its obligations. Roads

entitled to an indorsement might take instead a loan of $4,000 per mile in

state bonds, and roads already indorsed might exchange indorsed bonds for

state bonds at the rate of four for one. But no state bonds were to be

given for fraudulent issues of indorsed bonds, and when exchanges were

made the road was released from all obligations to the state.[1650] Had

the roads accepted this offer, the state would have suffered only a loss

of $482,000 in interest each year. However, from this time on the state

authorities were busy trying to extricate the state from the bankruptcy

caused by indorsing the railroad bonds.

The Alabama and Chattanooga Railroad

The Alabama and Chattanooga Railroad was the first of the roads to apply

for aid under the indorsement law, and was in the worst condition. The

story of this road is the story of all, only of greater length and more

disgraceful. The Alabama and Chattanooga Railroad Company was made up of

two older corporations, which, passing into the hands of Boston

financiers, united in order to secure the spoils from the state. Before

the union the officials had secured special legislation for one of the old

roads, the Wills Valley. The sharpers who were engineering the scheme had

agents at Montgomery when the Reconstruction legislature met, and these

were instrumental in having the indorsement raised from $12,000 to $16,000

a mile. The second corporation was the Northeast and Southwest Alabama

Railroad.[1651] The proposed road would be 295 miles long, and when

completed would be entitled to $4,720,000 from the state in indorsed

bonds. The law was explicit in regard to indorsation, but Governor Smith,

notwithstanding his opposition to the principle of the law, was criminally

careless, if no worse, in the way he administered it. The first 20 miles

were not built as required by law, but were purchased from the old

Northeast and Southwest Alabama Railroad. Moreover, the road was never

properly equipped, and the 20 miles from Chattanooga, on which indorsement

amounting to $320,000 was secured, were only rented from another

corporation (which was already indorsed to the amount of $8000 per mile by

the state of Georgia), and the rent was paid from the proceeds of the

indorsed bonds, which by law should have been applied only to construction

and equipment. Nor was the rented road equipped.[1652]

The indorsed bonds of the road to November 15, 1869, amounted to

$1,800,000,[1653] and Auditor Reynolds reported in 1870 that the

indorsement to September 30, 1870, was $3,840,000 on 240 miles.[1654]

These figures should have been correct, but they were not. In fact, 240

miles had been roughly finished, but the indorsement was far above the

legal limit. On December 5, 1870, a few days before he retired from

office, Smith reported to the legislature that he had indorsed the Alabama

and Chattanooga road for $4,000,000 for 250 miles.[1655] The facts, as

afterwards disclosed, were that only 240 miles were completed, and of

these only 154 were in Alabama. Yet he had issued bonds to the amount of

$4,720,000, covering not only the whole 295 miles of the proposed road,

but also including $580,000 in excess of what the law allowed to the

completed road, which with equipment was worth only $4,018,388. So here

were $1,300,000 in bonds which were clearly fraudulent. There was no

further indorsement of this road.[1656]

As if the enormous issue of indorsed bonds was not enough for the Stantons

of Boston, who were in control of the corporation, a second descent of

railroad promoters was made on the legislature in 1869-1870, and

$2,000,000 in direct state bonds were obtained for the Alabama and

Chattanooga Railroad. Indorsement was not enough for them. The act stated

that the bonds were to be issued from time to time as needed for use in

construction within the state, and in return the railroad lands were to be

mortgaged to the state.[1657] In order to secure the passage of this act,

the most shameful bribery was resorted to by the agents of the railroad

and of the New York capitalists who were financing the Stantons. One of

the Stantons came to Montgomery, also an agent from the banking house of

Henry Clews & Company, and agents from other houses interested in the

Stanton scheme. The Stantons themselves had no money except what they

received from the state. On February 4, 1870, the bill failed in the

House; but on February 5 a reconsideration was moved and the bill was

referred back to the committee with directions "to report within fifteen

minutes." The report was favorable, and the members having seen the light,

the bill was passed by a vote of 62 to 27.[1658] From the first, specific

charges of bribery had been made against those who, within three days, had

changed from active opposition to support of the measure.[1659] A year

later the House had a majority of young and inexperienced Democrats, and

they ordered an investigation. The Senate, with one solitary exception,

was still Radical. The investigation brought to light many unpleasant

facts relating to the methods employed in securing the passage of the

$2,000,000 appropriation and other railroad bills. Jerre Haralson, a negro

member, told his experience. Jerre was opposing the grant and posing as a

Democrat because he had not been sufficiently remembered on previous

occasions when the spoils were divided. Hearing that something was to be

divided, he went to Stanton's room, where, he said, there were many

members. Caraway, the negro member from Mobile, told Haralson that he

(Caraway) would not vote for the grant for less than $500. Stanton had

four rooms at the Exchange Hotel, to which, at his invitation, all the

purchasable members went. Stanton would take the members, one at a time,

into the hall, after which that member would leave. Haralson, to his

sorrow, was not called into the hall, but the next day he heard from the

other negro members that money was to be had, so he called again. Stanton

then accused Haralson of being a Democrat, but Haralson replied that he

had left that party, and after receiving a "loan" of $50, he went

home.[1660]

George B. Holmes, of the firm of Holmes & Goldthwaite, bankers, testified

that Gilmer, president of the South and North Alabama Railroad (Stanton

had all the roads in need of "boodle" working with him), asked him for

$25,000 to be used at the capitol. Gilmer told Holmes that the banker of

the road had refused it, as had also the Farley bank. Finally, Farley and

Holmes each agreed to furnish $12,000 to Gilmer. John Hardy, the chairman

of the committee, had asked for $25,000 to oil the bearings of the

political machine, and for that amount had agreed to have the bill passed.

At the last moment Hardy demanded $10,000 more, which Holmes obtained from

Josiah Morris. The committee was thus gotten into condition "to report

within fifteen minutes," and the legislature made ready to accept the

report.[1661] Two years later, Governor Lindsay stated in his message that

the Alabama and Chattanooga $2,000,000 bill had not passed the legislature

by the two-thirds vote as required by law.[1662] The law provided for the

issue of the state bonds for $2,000,000 from time to time as the road was

completed. Instead, however, they were issued in reckless haste, within a

month, and hurried away to Europe for sale. The proceeds were used to

build a hotel and an opera house in Chattanooga, where Stanton was accused

of trying to imitate Fiske and Gould of Erie.[1663]

When Governor Lindsay went into office, he could not find the "scratch of

a pen" relating to railroad indorsement. Governor Smith, as later

developments showed, had become careless with his bond indorsement and

kept no records, or else destroyed them or carried them away. Auditor

Reynolds reported in 1871 that his office had official knowledge only of

the indorsement of the Mobile and Montgomery road.[1664] In his message of

January 24, 1871, Lindsay said, "To what extent bonds under the various

statutes have been indorsed and issued by the state it is impossible to

inform you. No record can be found in any department of the action of the

executive in this regard." None of the securities required by law could be

found. Lindsay was unable to ascertain even the form of the indorsed

bonds, except those of the Mobile and Montgomery and the Montgomery and

Eufaula roads. Lindsay telegraphed to Smith's secretary, who replied that

there was no record of the bond issues except the certificates of the

railroad presidents. Lindsay found some of these, which were plain

certificates: "This is to certify that five more miles of the (----)

railroad has been finished." On each five-mile certificate, like the one

above, the road drew $80,000. Yet the law was strict in requiring proof of

completion, of good rails, bridges, road-bed, and equipment. At this time

45 or 50 miles of the Alabama and Chattanooga road had not been completed,

and 50 miles more had only a temporary track hastily thrown together in

order to get the indorsement. Governor Lindsay believed that the road as

planned promised great success, and was of the opinion that had the bonds

been issued according to law the road would have been completed. He had to

correspond with the railroad officials in order to ascertain the amount of

the bonds.[1665] A few days before Smith went out of office he reported

$4,000,000 indorsement on 244 miles of the Alabama and Chattanooga road.

Lindsay found no record of this. Almost immediately (January, 1871) the

Alabama and Chattanooga road defaulted in payment of interest, and Lindsay

was authorized by the legislature to go to New York and provide for the

payment of interest on 4000 bonds legally issued and held by innocent

purchasers.[1666] Statements were constantly appearing in the state press

that fraudulent issues had been made, and the Democratic papers were

warning purchasers against them, declaring that when the people of Alabama

again came into power, they had no intention of paying them.

The carpet-bag régime had numerous financial agents in New York,

Philadelphia, Boston, London, Germany, and elsewhere. Most of the agents

in New York gave Lindsay assistance in his investigations. Souter &

Company stated they had sold 4000 first mortgage Alabama and Chattanooga

bonds (all that were legal), and 2000 state bonds for the Alabama and

Chattanooga Company, all for more than 90 cents on the dollar. Erlanger et

Cie., of Paris, had purchased the state bonds at 95 cents in gold. Lindsay

soon discovered that 1300 Alabama and Chattanooga bonds in excess had been

issued, 580 in excess of what the road would be entitled to when

completed. Braunfels of Erlanger et Cie. testified that he had loaned

$300,000 on 500 bonds numbered between 4000 and 4720. The trustees under

the first deed of trust held bonds 4720 to 4800 and had refused to sell

them, knowing them to be fraudulent; 344 bonds of the fraudulent excess

had been partly sold and partly hypothecated to Drexel & Company of

Philadelphia; thirty had been hypothecated to a firm in Boston for

locomotives. Lindsay saw some of these fraudulent bonds, which were signed

by Governor Smith and sealed with the seal of the state.[1667] Lindsay,

through the state agents, Duncan, Sherman, & Company, recognized as legal

the first 4000 of these indorsed bonds and the 2000 state bonds and

ordered interest to be paid on them. All the others were rejected as

fraudulent.[1668]

The acts of February 25 and March 8, 1871,[1669] authorized the governor

to pay interest on the Alabama and Chattanooga bonds which were in the

hands of innocent purchasers on January 1, 1871. At that date at least 500

of the fraudulent issue had not been sold. The other 700 or 800 bonds

numbered above 4000 were declared fraudulent by Lindsay on the ground that

the part of road which called for the extra bonds simply did not exist. At

this time he paid interest on the railroad bonds, amounting to

$545,000,[1670] and later to $834,000. No interest was paid on bonds held

by the road or hypothecated by its officials. The governor was authorized

to proceed against the road, and, in July 1871, Colonel John H. Gindrat,

the governor's secretary, was ordered to seize the road and act as

receiver. The road had ceased running two weeks before. Stanton claimed

that the default had been caused by the threats of repudiation, and when

Gindrat went to take charge every possible obstacle and embarrassment

were imposed by the company. Besides, at the Mississippi end of the line

the employees had seized the road in order to secure their pay. Gindrat

pacified them, and went slowly along the road toward Georgia, where he was

stopped at the state line. Not only had Alabama indorsed that part of the

road within Georgia and Tennessee, for $16,000 a mile, but Georgia had

also indorsed it for $8000 a mile, and the part within her boundaries she

seized. The governor was forced to employ a large number of attorneys and

institute legal proceedings, not only in Alabama, but also in Georgia,

Tennessee, Mississippi, and in the Federal courts. Bullock, the carpet-bag

governor of Georgia, would not run the road in Georgia in connection with

the Alabama section, and not until there was a new governor (Conley) could

connections be made over the whole line.[1671]

For his action in repudiating the fraudulent bonds and in seizing the

road, Lindsay was much abused by all the railroad interests, by the hungry

promoters who wanted more money from the state, and by a section of his

own party which was influenced by prominent Democrats who were officers of

the road,[1672] and especially by influential Democratic lawyers. This

fact was important in weakening the Democratic cause in 1872. There were

some who opposed the seizure of the road because they believed that in the

then unsettled condition of affairs the state would not be able to manage

the road successfully; there were others who believed that the state

should not acknowledge the legality of the indorsement by seizure of the

road. The Debt Commission in 1876 reported that, although the laws were

strict, yet they had been violated in letter and in spirit before

indorsement. But though many (including the Debt Commission) believed the

issues illegal, yet by the seizure of the road the state acknowledged the

obligations.[1673]

The history of the road while in the hands of the state authorities was

not pleasant to Democrat or Radical. The state had first seized the

section of the road that was in Alabama, and had gone into the state

courts to get the remainder. The litigation promised to be endless, and

the case was taken to the Federal courts. Finally the road was sold at a

bankrupt sale, and Lindsay purchased it for the state, paying $312,000.

The Circuit Court reversed this action, and there was a new case in which

Busteed, district judge, adjudged the company bankrupt. In May, 1872, the

Federal court placed the road in the hands of receivers for the first

mortgage bondholders, who were to issue $1,200,000 in certificates to run

the road,--this to be a _lien prior to the claim of the state_. August 24,

1874, the same court placed the road in the hands of the trustees of the

first mortgage bondholders.

The road, while in the hands of the state receiver, was either badly

managed or was unsuccessful because of the obstruction by the other roads

and by capitalists. Several attempts were made, by Governors Lindsay,

Lewis, and Houston, to sell the road, but with no success. Finally, in

1876, the Debt Commission arranged with the holders of the first mortgage

bonds to turn over to them the whole claim of the state to the road, the

state paying $1,000,000, besides the interest, to be out of the

business.[1674]

Governor Lindsay had paid $834,000 interest on the Alabama and Chattanooga

bonds, and in 1874 there were arrears amounting to $1,054,000.[1675]

Congress had made a grant of land, six sections per mile, amounting to

1,000,000 acres, for all the roads within the boundaries of Alabama, and

the state held a mortgage on this land. Much of it was sold fraudulently

by the railroad company, and titles were given where there had been no

sales. One railroad agent pocketed $33,447.97 received from fraudulent

sales of this land. The state never received a cent.[1676]

Other Indorsed Railroads

The story of the other roads that applied for aid is similar, though

shorter and of a meaner nature. The Savannah and Memphis road was the only

one that failed to default.[1677] It was indorsed for $640,000, but when

the House committee was investigating, in 1871, as there was no record of

any indorsement, the president refused to appear or to give any

information.[1678] Later it was ascertained that at the time that the road

was worth only $263,000 it had been indorsed to the extent of

$320,000.[1679]

The South and North Alabama Railroad was a persistent applicant for

legislative favors. On December 30, 1868, the available portion of the

"two and three per cent fund," amounting to $691,789.43, was turned over

to the South and North road.[1680] The road secured indorsement at the

rate of $16,000 a mile along with other roads, but this was not enough,

and, on March 3, 1870, the legislature increased its indorsement to

$22,000 a mile.[1681] Governor Smith knew so little of what he did in

regard to railroads that in his last message he stated that the South and

North road was indorsed for $1,440,000, that is, for ninety miles at

$16,000 a mile,[1682] while he raised the indorsement of the Selma and

Gulf to $22,000 a mile, thus confusing the two roads. The House Railroad

Committee declared that by means of bribery the road had secured one

hundred miles of indorsement, amounting to $2,200,000.[1683] When Lindsay

was asked to indorse more bonds for this road, he made an investigation

which convinced him that too many bonds had already been issued, and he

refused to sign any more. Under the law the road was entitled to 1900

one-thousand-dollar indorsed bonds, but had received 2200,[1684] an

indorsement of $2,200,000, while the road equipped was valued at only

$1,625,200.[1685] When it became known that fraudulent issues had been

made, the Investigating Committee called before them the ex-treasurer of

the state, Arthur Bingham, of Ohio. He claimed and was allowed the

constitutional privilege of refusing to testify on the ground that his

testimony would tend to incriminate himself.[1686] In 1870 it was

estimated that including the "three per cent" fund the road had received

from the state $2,000,000 more than the cost of building it.[1687]

Governor Lewis, in 1873, reported that the South and North road was

indorsed for $4,026,000, including $2,200,000 that was not recorded on the

books of the state.[1688]

[Illustration: SOME RECONSTRUCTIONISTS.

GOVERNOR L. E. PARSONS.

GOVERNOR WILLIAM H. SMITH.

GOVERNOR D. P. LEWIS.

NEGRO MEMBERS OF CONVENTION OF 1875 are on the left. The white man in the

back row is Sam. Rice.]

The East Alabama and Cincinnati corporation consisted of Governor W. H.

Smith, three senators (two of whom were J. J. Hinds and J. L. Pennington),

and two members of the lower house. Stanton of the Alabama and Chattanooga

was also connected with it; in fact, he was connected in some way with

nearly all the schemes to secure state aid. The road was mortgaged to

Henry Clews & Company for $500,000. It had no money of its own, but

secured state indorsement for $400,000 and a bond issue of $25,000 from

the town of Opelika. This indorsement by Governor Smith was not

discovered until 1871, when Lindsay was accused of issuing the bonds.

This he flatly denied, and he was correct. The Tennessee and Coosa rivers

road had $33,513.25, if no more, of the "two per cent fund." On March 2,

1870, that road was released from its indebtedness to the state (part of

the "two and three per cent funds") on condition that it apply for no

further aid. But now, in order to get the indorsement, a part of this road

was transferred to the East Alabama and Cincinnati road, to pass as a new

road. With an indorsement of $400,000 besides the $25,000 Opelika bonds,

the road equipped was valued at only $264,150.[1689]

The Selma and Gulf was another road without resources of its own, and, so

far as it was completed, was built with state aid. Governor Smith, in

clear violation of the law, the committee reported, indorsed the road for

$480,000. Some one, probably Smith, though Lindsay was accused of it,

raised this amount to $640,000, $160,000 of which was not recorded. At

this time the road was valued at $424,900, and the company threatened to

default unless further aid was extended. Smith thought that the road was

indorsed for $22,000 a mile and reported $660,000 indorsement.[1690]

The Mobile and Alabama Grand Trunk road, valued at $704,225, was indorsed

by the state for $800,000. The city of Mobile also issued $1,000,000 in

bonds for this road.[1691] There was no record of an application for aid

from the New Orleans and Selma Railroad. Neither Smith nor Lindsay

reported it, yet its financial agent had secretly secured an indorsement

of $320,000, contrary to law. The road was valued at $255,350. It had no

resources except $140,000 in Dallas County bonds, and its president,

Colonel William M. Byrd, resigned rather than be a party to the

stealing.[1692]

The promoters of the Selma, Marion, and Memphis road placed General N. B.

Forrest at the head of the enterprise, and for three years he worked hard

to make the road a success. Governor Smith indorsed the road for $720,000,

or $18,000 a mile, when only forty miles were completed. In 1873 the road

was valued at $738,400. When the company failed, as was intended from the

first, General Forrest gave up every dollar he could raise in order to pay

debts due on contracts, and he himself was left a poor man.[1693]

The Montgomery and Eufaula road obtained something over $30,000 of the

"three per cent fund" from the state, and in 1868 the governor was

authorized by the legislature to indorse the road, notwithstanding this

debt to the state, which was considered simply as an indorsement.[1694]

Under this act the road was indorsed for $1,280,000, and in addition state

direct bonds to the amount of $300,000 were issued to the company in 1870.

For this loan there was no security. Lewis Owen, a former president,

refused to answer when it was charged that bribery had been used to secure

the passage of the bill. At this time the road was valued at $825,289. In

1873 capitalists offered to lease the road for enough to pay the interest

on its bonds, provided the state would release the road from all claims

and give to it the $330,000 already loaned. This was done. Later it was

seized by the state and eventually sold for sufficient money to cover

losses caused by the indorsement.[1695]

The Mobile and Montgomery road secured $2,500,000 by special act of the

legislature.[1696] The road was valued at $2,516,250[1697] and was already

built, hence the indorsement was safe.

The total indorsement was about $17,000,000.

VALUE OF ALL RAILROADS IN THE STATE (FROM THE AUDITOR'S REPORTS)

1871, 1496 miles $25,943,052.59

1872, 1629 miles 29,580,737.64

1873, 1793 miles 25,408,110.76

1874, ---- miles 22,747,444.00

1875, ---- miles 12,033,763.39

1875, (returns from railroad officials) 9,654,684.99

SUMMARY

========================================================

| | PER | PER | OF |

--------------|------|-------|-----------|-------------|

Chattanooga | 295 |$15,000| $16,000 |$4,018,388.00|

| | | | |

Cincinnati | 25 | 10,000| 16,000 | 264,150.00|

| | | | |

Alabama G.T. | 50 | 12,000| 16,000 | 704,225.00|

| | | | |

and Eufaula | 60 | 13,000| 16,000 | 1,157,071.60|

| | | | |

Montgomery | | 10,600| 16,000 | 2,516,250.00|

| | | | |

Memphis | 40 | 10,000| 16,000 | 498,810.00|

| | | | |

Selma and Gulf| 40 | 10,000| 16,000 | 424,900.00|

| | | | |

and Memphis | 45 | 14,000| 16,000 | 738,400.00|

| | | | |

and Selma | 20 | 12,000| 16,000 | 225,350.00|

| | | | |

| 100 | 15,000| 22,000 | 2,877,730.00|

========================================================

=======================================

INDORSEMENT | PRESENT | REMARKS

OF | ROAD |

ROAD | |

----------------|----------|-----------

|Ala. Great|Seized by

$5,300,000[1698]| Southern | state.

| |Completed.

| |

| |Never

400,000 | ---- | completed.

| |

|Mobile and|

880,000[1699]| Birm'gh'm| ----

| |

|Central of|Seized and

1,280,000[1700]| Georgia | leased by

| | the state.

| |

|L'sville |

| and |

2,500,000[1701]| Nashville| ----

| |

| |Did not

640,000 | ---- | default;

| | never

| | completed.

| |

640,000[1702]| ---- |Never

| | completed.

| |

| |Never

765,000[1703]| ---- | completed.

| |

|B'ham, |Never

320,000 | Selma & | completed.

| N.O. |

| |

|L'sville |

| and |

4,026,000[1704]| Nashville| ----

=======================================

County and Town Aid to Railroads

An act of December 31, 1868, authorized the counties, towns, and cities to

subscribe to railroad stock. The road corporation was to be voted on by

the people. If "no subscription" was voted, a new election might be

ordered within twelve months, and if again voted down, the matter was to

be considered as settled. If a subscription was voted, an extra tax was to

be levied to pay the interest on the bonds; the taxpayer was to be

presented with a tax receipt which was good for its face value in the

county or city railroad stock.[1705] Several of the counties and towns

issued bonds and incurred heavy debts which have burdened them for years.

No one seems to have profited by the issues except the promoters.[1706]

The counties that suffered worst from Reconstruction bond issues were

Randolph, Chambers, Lee, Tallapoosa, and Pickens. These were hopelessly

burdened with debt and became known as the "strangulated" counties. There

was, after the Democrats came into power, much legislation for their

relief. The state gave them the state taxes to assist in paying off the

debt and also loaned money to them. Several cities and towns, notably

Mobile, Selma, and Opelika, were so deeply in debt that they were unable

to pay interest on their debts. They lost their charters, ceased to be

cities, and became districts under the direct control of the governor.

There are still several such districts in the state. The constitution of

1875 forbade state, counties, or towns to engage in works of internal

improvement, or to lend money or credit to such, or to any private or

corporate enterprise.

It is impossible to secure complete statistics of the railroad bond issues

of counties and towns. Some issues were made in ignorance, without

authority of law, others were made under the provisions of a general law.

Naturally, the counties that suffered most were those of the Black Belt

under carpet-bag control. The following is a summary of the issues made

under special acts:--

=================================================================

----------|----|---------|---------------|---------|-------------

Barbour |----| ---- |Vicksburg and |Act, Dec.| ----

| | | Brunswick | 31, 1868|

Chambers |----| $150,000|East Alabama |Act, Dec.|

| | | and Cincinnati| 31, 1868| ----

Dallas |----| 140,000|New Orleans and|Act, Dec.|

| | | Selma | 31, 1868| ----

| | | and Memphis | 3, 1870| 1011 to 550

| | | and Memphis | 3, 1870| 2260 to 301

Lee |----| 275,000|East Alabama |Act, Dec.|

| | | and Cincinnati| 31, 1868| ----

| | | and Memphis | 3, 1870| 1212 to 607

Randolph |----| 100,000| ---- |Act, Dec.|

| | | | 31, 1868| ----

Tallapoosa|----| 125,000| ---- | ---- | ----

| | | and Memphis | 2, 1870| 98 to 35

| | | and Memphis | 3, 1870| 164 to 1

| | | Northwestern | 8, 1871| ----

Mobile |1873| 200,000| ---- |Act, Mar.|

| | | | 7, 1873| ----

Opelika |----| 25,000|East Alabama | |

| | | and Cincinnati| ---- | ----

| | | Alabama | 23, 1872| ----

| | | Girard | 8, 1868| ----

=================================================================