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THE LIBRARY 
 
 OF THE 
 
 NEW YORK STATE SCHOOL 
 
 OF 
 
 INDUSTRIAL AND LABOR 
 
 RELATIONS 
 
 AT 
 CORNELL UNIVERSITY 
 
Cornell University 
 Library 
 
 The original of tiiis book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924002400285 
 
VII-VIII 
 
 THE ECONOMIC HISTORY 
 
 OF THB 
 
 BALTIMORE AND OHIO RAILROAD 
 
 1827-1853 
 
JOHNS HOPKINS UNIVERSITY STUDIES 
 
 IN 
 
 Historical and Political Scienc] 
 
 HERBERT B. ADAMS, Editor 
 
 History ia past Politics and Politics are present History.— Freemon 
 
 FIFTEENTH SERIES 
 VII-VIII 
 
 THE ECONOMIC HISTORY 
 
 OF THE 
 
 BALTIMORE AND OHIO RAILROAD 
 
 1837-1853 
 
 By MILTON REIZENSTEIN, Ph. D. 
 
 Sometime Scholar in Economics, Johns Hopkins University 
 PROPERTY OF LIEPARY 
 
 NEW YDBK STATE SnnnOL 
 INDUSTRIAL m LACOR RELATIONS 
 
 CORNELL UNIVERSITY 
 
 ealtiuokb 
 The Johns Hopkins Pkess 
 
 PUBLISHED MONTHLY 
 
 Jnly-AuguBt, 1897 
 
OOPYKWHT, 1897, BT THE JOHNS HOPKINS PKBSS. 
 
 THE PRIEDENWALD CO. PEDfTBRS, 
 BALTIUOBE. 
 

 CONTENTS. 
 
 PAGE 
 
 Intboduction 7 
 
 I. Organization of the Baltimore and Ohio Eailwat 
 Company : 
 
 Baltimore and the West ; need of an efficient connection, 9 
 
 Insufficiency of turnpikes and canals 10 
 
 Organization of the B. & O. Kailway Company 13 
 
 Analysis of the Company's charter 15 
 
 II. Beginning or Construction. Baltimore to Harper's 
 Ferry (1828-1834) : 
 
 The corner-stone laid 30 
 
 Pnhlic good- will toward the Company 21 
 
 Congress refuses aid 32 
 
 First division opened , 34 
 
 Experiments with locomotive power 35 
 
 Opened to Frederick ; results 36 
 
 American 1 ocomotives 38 
 
 Contest between the Railroad and the C. & O. Canal .... 39 
 
 Improvements in technique 33 
 
 III. Extension. Harper's Ferry to Cumberland (1834-1842) : 
 
 New and projected railroads 37 
 
 Suhscriptions by Maryland and Baltimore 38 
 
 " Preferred stock " 40 
 
 Eates, revenues and finances 41 
 
 Virginia's legislation 44 
 
 Stock orders, bond sales and dividends 47 
 
 Completion to Cumberland 50 
 
 IV. Embarrassment and Delay (1842-1848) : 
 
 Delays in legislation 51 
 
 Financial difficulties 54 
 
 Need of reconstruction and new equipment 58 
 
 V. Completion. Cumberland to Wheeling (1848-1853) : 
 
 President Swann and his policy 63 
 
 Financial measures 64 
 
 A question as to route 66 
 
 Perfecting of road-bed and equipment 69 
 
 The railroad completed 70 
 
6 Contents. [280 
 
 VI. General Kbsults : 
 
 Effects upon the Industries of Maryland 73 
 
 Mines and quarries 73 
 
 Flour, tobacco, <Ssc 74 
 
 Cattle and animal products 75 
 
 Development of towns 76 
 
 Finances of the railroad 78 
 
 Bonds 78 
 
 Dividends 79 
 
 Stock orders 79 
 
 Financial policy 80 
 
 Discrimination in rates 83 
 
 Contributions to technique of railroading 83 
 
 VII. Appendix : 
 
 1. Chronology of the B. & 0. Railroad 85 
 
 2. Cost of construction 86 
 
 3. Financial statement (1830-1852) 87 
 
 4. Commodities transported eastwardly (1831-1853) 88 
 
 5. Bibliography 89 
 
INTRODUCTION. 
 
 It has been the intention of the writer to present a brief 
 history of the Baltimore and Ohio Railroad from its incep- 
 tion in 1826 until its completion to Wheeling in January, 
 
 1853. 
 
 The monograph has been designed as a study in the 
 economics of transportation, and stress has been laid upon 
 the influence of the railroad in the development of the 
 industry and commerce of the city of Baltimore, and of the 
 agricultural, mineral and manufacturing resources of the 
 state of Maryland. The Baltimore and Ohio having been 
 the first great through-route railroad projected in America, 
 has naturally an important place in the regard of the student 
 of transportation. The beginnings of some of the present 
 difficult railroad problems appear in the history of this road, 
 and these have not only been treated incidentally as they 
 appeared in connection with the legislative, financial and 
 mechanical history of the railroad, but have been summar- 
 ized in the final chapter. 
 
 The hearty thanks of the writer are due Prof. Sidney 
 Sherwood and Dr. J. H. Hollander of the Johns Hopkins 
 University for their valuable aid in the preparation of this 
 monograph. 
 
THE ECONOMIC HISTORY OF . 
 THE BALTIMORE AND OHIO RAILROAD, 
 
 1827-1853. 
 
 CHAPTER I. 
 
 Organization of the Baltimore and Ohio 
 Railway Company. 
 
 Towards the end of the first quarter of the present cen- 
 tury, Bahimore was confronted by the important economic 
 problem, how to retain its rank as a prominent commercial 
 emporium of the United States. 
 
 , Other cities were drawing away from Baltimore its valu- 
 able trade with the West by introducing improved systems 
 of transportation. 
 
 The city of New York had led the way in this particular 
 line of enterprise by the construction of the Erie Canal — 
 completed in 1825 — extending from Albany to Buffalo. 
 Pennsylvania had also begun to open up its resources by a 
 judicious system of internal improvements, mainly canals, 
 built especially for the transportation of coal. 
 
 Virginia had not been insensible to the fact that by the 
 construction of proper canals through the valleys of the 
 Potomac or the James rivers, a valuable commercial inter- 
 course might be secured with the West. Ohio, too, had 
 begun a system of internal improvements, designed to 
 afford a channel for the outflow of its rich products as well 
 as to provide a suitable means of ingress for foreign com- 
 modities. 
 
 It must not be supposed that Maryland had not been 
 
10 The Economic History of the [284 
 
 alive to the importance of internal improvements or that it 
 had taken no active steps in that direction. As early as 
 1784 the states of Maryland and Virginia had conjointly 
 granted a charter to the Potomac Company, giving it power 
 to improve the navigation of the Potomac river from tide- 
 water to the highest practicable point on the North Branch, 
 and to continue it thence to Cumberland by means of canals. 
 
 But this company became involved in difficulties, and a 
 commission was appointed by the states of Maryland and 
 Virginia in 1821 to investigate its affairs. The commission 
 reported that the company was hopelessly insolvent, that it 
 was unreasonable to expect that the company would ever 
 be able to carry out the objects for which it was incorpo- 
 rated, and that it was best to divest the Potomac Company 
 of its charter apd adopt some more effective mode of im- 
 proving the navigation of the river. This, the report con- 
 tinued, could be best accomplished by the construction of 
 a regular canal outside of the river-bed, though following 
 its ravine, and that this would be not only the most useful 
 and durable, but incomparably the cheapest improvement. 
 Baltimore, it was recommended, should be connected with 
 the projected canal by a lateral branch. This report, sub- 
 mitted to the legislatures of Maryland and Virginia, ulti- 
 mately led to the construction of J;he Chesapeake and Ohio 
 Canal. 
 
 Congress had long before turned its attention to the im- 
 portant question of internal improvement. As early as 
 1806 the United States had begun the construction of the 
 Cumberland or National Road. This road occupied the 
 site a part of that route along which, years before, emigra- 
 tion and traffic over the mountains had flowed from Balti- 
 more. 
 
 Recognizing the importance of the canal projected along 
 the valley of the Potomac to the West, Congress in April, 
 1824, appropriated $30,000 for the expenses of making a 
 survey, estimates of the probable cost, and plans for the 
 construction of such a canal. The results, as reported by 
 
285] Baltimore and Ohio Railroad, 1827-1853. 11 
 
 the committee of engineers appointed for the purpose, are 
 exhibited in the following summarized table : 
 
 qnnHon. Distances. n^=~!,nV Number Amount of 
 
 Sections. jmgg_ -j.^g_ Feet. ' °^^°''^^- Estimate. 
 
 Eastern .... i86 578 74 $8,177,081.05 
 
 Middle 70 loio 1961 246 10,028,122.86 
 
 Western 85 440 619 78 4,170,223.78 
 
 Totals .... 241 1450 3158 398 $22,375,427-69 
 
 The report of the commissioners appointed to inquire into 
 the condition of the Potomac Company gave rise to the 
 Chesapeake and Ohio Canal. The report of the engineers 
 appointed by Congress, in the light of subsequent events, 
 may be regarded as one of the direct causes leading to the 
 construction of the Baltimore and Ohio Railroad. It was 
 believed that the burden of payment would fall on the 
 state of Maryland and the city of Baltimore rather than 
 upon the national government. In consequence, when the 
 enormous cost of the project became known, the enthusiasm 
 in Baltimore for the construction of such a canal was con- 
 siderably abated, and the hope of connecting Baltimore with 
 the West by a still-water route seemed a forlorn one. Be- 
 sides, there was the other very material difficulty that the 
 scarcity of water in the Alleghanies at the high elevation 
 over which the canal must pass would make its successful 
 accomplishment problematic, even if the money needed 
 could be raised. Baltimoreans, too, did not relish the idea 
 of making Georgetown the eastern terminus of the canal, 
 with Baltimore connected therewith by a lateral branch some 
 fifty miles in length. 
 
 However, quick action was necessary on the part of 
 Baltimore, for Philadelphia and New York had greatly en- 
 croached upon its trade. Turnpike roads were already be- 
 hind the times. Canals, as had been shown, owing to the 
 natural obstacles of a mountainous country, were entirely 
 too expensive and would, besides, take too long a time to 
 construct. Some new method of transportation must be 
 found. 
 
12 The Economic History of the [286 
 
 It is to Philip E. Thomas of Baltimore, more, perhaps, 
 than to any other one man, that the credit of introducing 
 railroads for passenger and freight traffic into the United 
 States is due. Mr. Thomas was a Quaker merchant of Bal- 
 timore, and was also in 1826, president of the Mechanics' 
 Bank of that city. He had been one of the commissioners 
 on the part of the state of Maryland in the recently organ- 
 ized Chesapeake and Ohio Canal Company, but he had 
 resigned that position after the futility of the scheme was 
 shown. 
 
 With Mr. George Brown, a director in the bank of which 
 he was president, Mr. Thomas began to study the new mode 
 of transportation then being tried with success in England 
 upon the Liverpool and Manchester Railway.'' Evan 
 Thomas, a brother of P. E. Thomas, and William Brown, 
 a brother of George Brown, were both in England at the 
 time and forwarded to their respective brothers in Baltimore, 
 information relative to the new project. The conjoint study 
 of the question by the two Baltimoreans convinced them that 
 the railway was the method of communication with the West 
 that Baltimore required. Having interested other promi- 
 nent Baltimoreans in the plan, they determined to organize 
 a railroad company for general traflSc. This was the first 
 company of the kind in America. 
 
 On February 12, 1827, a meeting of some twenty-five 
 prominent citizens was held at the residence of Philip E. 
 Thomas, to consider the best means of restoring to Balti- 
 more that trade with the West that had been diverted. 
 Various documents were read tending to show the great 
 advantages which railways possessed over turnpikes and 
 canals as a mode of transportation, and a committee was 
 appointed to examine carefully into these advantages and 
 into the general subject of railroads and report at the next 
 meeting. 
 
 On the appointed evening, February 19, 1827, this com- 
 
 ^ This railroad was not formally opened, however, until September 
 IS, 1830. 
 
287] Baltimore and Ohio Railroad, 1827-1853. 13 
 
 mittee, through its chairman, Philip E. Thomas, presented 
 a full account of its labors. The efforts of New York and 
 Philadelphia to divert the western trade from Baltimore 
 were noted, as well as the plan then being proposed to con- 
 nect the tide-water of the Susquehanna, by means of a canal, 
 with the eastern extremity of the Pennsylvania state canal, in 
 order to secure the ascending and descending trade of the 
 Susquehanna, with the ultimate object of securing direct 
 water communication with the Great Lakes. But no matter 
 how important absolutely such trade might be to Baltimore, 
 it was of minor consideration when compared with the im- 
 mense commerce of the West. Baltimore was situated one 
 hundred miles nearer the western navigable waters than was 
 Philadelphia, the report said, and two hundred miles nearer 
 than New York. New Orleans was pointed out as the only 
 city which could compete with Baltimore for the western 
 trade. 
 
 After showing at length the advantages which the canal 
 system' had in England over the same system in America, 
 and arguing that if England with these advantages was 
 abandoning the canal for the railroad, America might surely 
 do so, the report pointed out that although only one^ rail- 
 way had as yet been constructed in America, the results had 
 been very satisfactory. So far as the competition of New 
 Orleans with Baltimore was concerned, it was stated that the 
 western products could be delivered in Baltimore by rail at 
 smaller expense and with less loss than at New Orleans by 
 boat. 
 
 The value of a system of railways in the transportation 
 of perishable food supplies was recognized in the remark 
 
 ^ In point of fact there were two short roads in operation in the 
 United States at this time. The first railroad built in the United 
 States, the one here referred to, was three miles long and extended 
 from the granite quarries at Quincy, Mass., to the Neponset river. 
 The second was a gravity railroad, nine miles long, extending from 
 the coal mines at Mauch Chunk, Pa., to the Lehigh river. For 
 full descriptions of these railroads see William H. Brown, "The 
 History of the First Locomotives in America," ch. xii, pp. 70-71. 
 
14 The Economic History of the [288 
 
 that if the proposed railroad were built from Baltimore to 
 the Ohio river, an extensive market in the West would at 
 once be opened for the fish and oysters of eastern Maryland, 
 necessarily increasing the value of the numerous fisheries 
 and oyster-beds of the Chesapeake Bay. This would cause 
 a large increase of traffic upon the waters of the bay, and 
 would open to the residents of eastern Maryland a new and 
 highly lucrative source of wealth. 
 
 This report is to-day probably one of the best records 
 extant of ideas in 1827 regarding railroads and their econo- 
 mic importance. This report of the committee was adopted, 
 and it was resolved to apply immediately to the legislature 
 of Maryland for an act incorporating the Baltimore and 
 Ohio Railway Company, with all powers needed to con- 
 struct a railway from the city of Baltimore to the Ohio 
 river. A committee of twenty-five persons was appointed 
 to apply to the legislature of Maryland for the desired act 
 of incorporation, and another committee was appointed to 
 examine the two railways then in operation at Mauch 
 Chunk, Pa., and Quincy, Mass. 
 
 The report of the last-mentioned committee is dated 
 June 12, 1827, and describes at considerable length the 
 mode of construction of the two roads examined.'' From 
 their investigations the committee drew the conclusions that 
 there would probably be no difficulty in constructing the 
 proposed railway, but that care must be exercised in the 
 selection of the route and the application of motive power 
 on the road, and recommended in conclusion that a deputa- 
 tion be sent abroad to examine the railroads in England. 
 Following out this advice, Jonathan Knight, an engineer, 
 and Captain W. G. McNeill, of the U. S. Topographical 
 Corps, were sent abroad in the autumn of 1828, and return- 
 ing in the spring of the following year, reported that their 
 examinations of the English railroads led them to approve 
 the surveys made and route proposed for the Baltimore and 
 Ohio Railroad. 
 
 ' See note, p. 13. 
 
289] Baltimore and Ohio Railroad, 1827-1853. 15 
 
 In the meantime the task of drawing up a charter of incor- 
 poration for the proposed enterprise had been given to John 
 Van Lear M'Mahon, a young lawyer of twenty-seven, who 
 was at this time a delegate from the city of Baltimore to the 
 Maryland legislature. The charter which he drew up was 
 in all probability the first of its kind in America.' In con- 
 sequence it is of enough interest to the student of transpor- 
 tation to merit a brief analysis. 
 
 The act to incorporate the Baltimore and Ohio Railroad 
 Company was passed February 28, 1827. This act, which 
 constituted the charter of the company, contained twenty- 
 three sections. The earlier sections dealt mainly with the 
 stock and the stockholders. They provided that the capital 
 stock of the company should be three million dollars, in 
 shares of one hundred dollars each, of which ten thousand 
 shares should be reserved for subscription by the state of 
 Maryland ' and five thousand for subscription by the city of 
 Baltimore ' for the space of twelve months after the passage 
 of the act. The remaining fifteen thousand shares were to 
 be subscribed by individuals or corporations. As soon as 
 ten thousand shares ,were subscribed the company was 
 declared to be established with all the powers, rights and 
 privileges conferred by the act. If more than fifteen thou- 
 sand shares were subscribed, the subscription was to be 
 reduced to that number by striking off from the largest 
 number of shares or reducing all subscriptions to one share. 
 If there were more than fifteen thousand different subscrip- 
 tions, lots were to be drawn to determine which were to be 
 excluded. One dollar was to be paid on every share at the 
 time of subscribing, and the residue was to be paid in instal- 
 ments; provided, however, that not more than one-third of 
 
 ^ Acts of Maryland Assembly, 1826, chapter 123. 
 
 ' $500,000 subscribed under Act 1827, ch. 104; additional subscrip- 
 tion of $3,000,000 by Act 183s, ch. 395. 
 
 3 $500,000 subscribed under Resolutions of 1827, No. 41 ; additional 
 subscription of $3,000,000 under Act of Assembly, 1835, ch. 127, and 
 Resolutions of 1836, No. 40. 
 
16 The Economic History of the [290 
 
 the subscription was to be demanded in any one year from 
 the commencement of the work, nor any payment until at 
 least 60 days' public notice of demand for payment had been 
 given. Stock was forfeited in case any subscriber failed to 
 pay any instalment within 60 days after it had become due. 
 
 Nine commissioners were appointed to receive the sub- 
 scriptions to the capital stock, and they were to keep the 
 books open for this purpose for at least ten successive days. 
 The stockholders were then to elect twelve directors by 
 ballot, and these in turn to elect a president. Each stock- 
 holder was allowed one vote for every share of stock owned 
 by him, and voting by proxy was authorized. If the stock 
 reserved for subscription by the state of Maryland and the 
 city of Baltimore was not subscribed, provision was made 
 that such stock coul,d be disposed of by the president and 
 directors for the benefit of the company for any sum not 
 under its par value. 
 
 The administration of the railroad was vested entirely 
 in the president and board of directors. They had power 
 to appoint all the officers, engineers, agents, etc., whom they 
 might deem necessary to transact the business of the com- 
 pany, with full powers of removal at will of all these em- 
 ployees. Further, they had power to make by-laws regu- 
 lating the manner of adjusting and settling all accounts 
 against the ctfihpany, regulating the manner and evidence 
 of transfers of the company's stock, and indeed for exercis- 
 ing all the powers vested in the company by the act of 
 incorporation. 
 
 An important power was given to the president and 
 directors by the thirteenth section, by which they were 
 allowed to increase the capital stock of the company by the 
 addition of as many shares as they might deem necessary, 
 with the restriction, however, that they must not be sold 
 below their par value. Power to borrow money and to 
 issue mortgage bonds therefor was also granted. 
 
 The intention of the organizers of the company to build 
 a through line from Baltimore to the Ohio river is clearly 
 
291] Baltmore and Ohio Rmlroad, 1827-1853. 17 
 
 shown by the grant of power to construct such a road. The 
 right of eminent domain was given to the president and 
 directors, not only as regards land, but also as regards 
 materials needed in the construction of the road. Adequate 
 provision was, of course, made to reimburse owners for 
 property taken by the railroad company. 
 
 There were certain restrictions put upon the powers of the 
 company. If the road was not begun within two years from 
 the time of the passage of the act and completed within 
 Maryland within ten years after the time of commencement, 
 the act was declared null and void. Full right and privilege 
 were reserved to the citizens of Maryland to connect with 
 the Baltimore and Ohio any other railroad leading from the 
 main line to any other part of the state. It was provided 
 further that whenever the Baltimore and Ohio crossed or 
 intersected any other road or way, the railroad must be 
 built so as not to impede the passage or transportation of 
 persons or property along the intersected road. 
 
 Power was granted the company to place on the railroad 
 " all machines, wagons, vehicles or carriages of any descrip- 
 tion whatsoever which they may deem' necessary or proper 
 for the purposes of transportation." The company was 
 allowed to charge " tolls " upon goods transported over the 
 railroad as follows : " On all goods, produce, merchandise or 
 property of any description whatsoever transported by them 
 from west to east, not exceeding one cent a ton per mile for 
 toll, and three cents a ton per mile for transportation; on 
 all goods, produce, merchandise or property of any descrip- 
 tion whatsoever transported by them from east to west, not 
 exceeding three cents a ton per mile for tolls and three cents 
 a ton per mile for transportation; and for the transportation 
 of passengers, not exceeding three cents per mile for each 
 passenger." From this quotation it is easy to see that the 
 railroad was regarded as a new and improved kind of toll- 
 road. This is shown also by a provision enacting that no 
 person should travel upon or use the road of the company 
 for transportation without permission from the officers. 
 
18 The Economic History of the [292 
 
 As regards taxation, it was provided that the shares of the 
 capital stock of the company should be deemed personal 
 estate and should be exempt from the imposition of any 
 tax or burden by the state's assent to the act of incorpora- 
 tion. The Court of Appeals of the state of Maryland' later 
 decided that under this section of the act the property of 
 the road of every description should be exempt from taxa- 
 tion. 
 
 Provision was also made in the charter for the declaration 
 by the company of annual or semi-annual dividends out of 
 " the nett profits arising from the resources of the said com- 
 pany after deducting the necessary current and probable con- 
 tingent expenses," to be divided among the stockholders 
 according to their holdings. Wilful injury done to the road 
 was to be punished by fine or imprisonment, or both, in the 
 discretion of the court in which the offender was tried. 
 
 Power to open subscription books, to sell stock and to 
 organize the company was given as soon as the act was 
 passed by the legislature of Maryland. 
 
 The citizens of Baltimore were fully alive to the local 
 significance of a direct line of communication with the great 
 agricultural and mineral regions of western Maryland and 
 Ohio. It was estimated that the district which would de- 
 pend mainly upon this road for the conveyance of its pro- 
 ducts contained a population of about two million persons, 
 or nearly one-fifth of the total population of the United 
 States at this time. Many products of the country west of . 
 the Alleghany mountains were of little value in those 
 regions owing to the heavy expense of shipping them to 
 a market, and it was understood that a railroad would lead 
 to larger shipments and the trade of Baltimore be greatly 
 increased thereby. 
 
 As a consequence, although the subscription books were 
 open only twelve days, from March 20, 1827, until March 
 31, at the Mechanics' Bank in Baltimore, at the Farmers' 
 
 ' Tax Cases, 12 Gill & Johnson, 1 17. 
 
293] Baltimore and OUo Railroad, 1827-1853. 19 
 
 Branch Bank in Frederick, and at the Hagerstown Bank in 
 Hagerstown, yet in Baltimore alone 41,788 shares were sub- 
 scribed (including the 5000 shares taken by the city of Bal- 
 timore). These shares subscribed represented 22,000 indi- 
 viduals. Large subscriptions were also made at Hagers- 
 town and Frederick. But as only 15,000 shares were allotted 
 to individuals at this time, the shares were apportioned. 
 
 The Baltimore and Ohio Railroad Company was formally 
 organized on April 23, 1827. The first board of directors 
 elected by the stockholders consisted of Charles Carroll of 
 Carrollton, Philip E. Thomas, William Patterson, Robert 
 Oliver, Alexander Brown, Isaac McKim, William Lorman, 
 George Hoffman, Thomas EUicott, John B. Morris, Talbot 
 Jones and William Steuart. These elected Philip E. 
 Thomas, president of the road, and George Brown, 
 treasurer. 
 
 The state of Virginia had confirmed the charter, March 
 8, 1827, and the state of Pennsylvania assented to it, Feb- 
 ruary 22, 1828. The city of Baltimore was a stockholder 
 in the railroad from its beginning, having decided by a 
 resolution," approved March 20, 1827, to take the 5000 
 shares of stock reserved for it by the company's charter, 
 and provision was made for two special directors im the 
 company to represent the interests of Baltimore. 
 
 " Session of 1827, Resolution No. 41. 
 
20 The Economic History of the [294 
 
 CHAPTER II. 
 
 Beginning of Construction. Baltimore to 
 Harper's Ferry (1828-1834). 
 
 Immediately after the organization of the company, pre- 
 liminary surveys were begfun for the location of the pro- 
 posed railway. The company's engineers, Colonel S. H. 
 Long and Jonathan Knight, were assisted by several mem- 
 bers of the U. S. Topographical Survey. After a prelim- 
 inary reconnoissance covering almost all the ground within 
 the limits of Maryland, experimental surveys of three dis- 
 tinct routes were made. 
 
 The results of these surveys were communicated to the 
 president and directors of the railroad in an exhaustive 
 report.'' The report confirmed the opinion that the building 
 of the road was entirely practicable, and recommended the 
 adoption of the route along the valley of the Patapsco, and 
 thence in the direction of Bennett's, Bush or Linganore 
 Creek to the Point of Rocks, where the Potomac river 
 passes the Catoctin mountain. It was decided that the con- 
 struction of the road shotfld be at once begun along this 
 route. 
 
 Accordingly on the Fourth of July, 1828, amid a great 
 and enthusiastic concourse of spectators, the corner-stone 
 of the Baltimore and Ohio Railroad was laid by the vener- 
 able Charles Carroll of Carrollton, then more than ninety 
 years old. He is said to have remarked to one of his friends 
 after the ceremony, " I consider this among the most im- 
 portant acts of my life, second only to my signing the Decla- 
 ration of Independence, if even it be second to that."' 
 
 ' " Report of the Engineers on the Reconnoissances and Surveys 
 made in reference to the B. & O. R. R." Submitted April 5, 1828. 
 
 'W. P. Smith "History and Description of the Baltimore and 
 and Ohio Railroad," p. 20. 
 
295] Baltimore and Ohio Railroad, 1827-1853. 21 
 
 Three days later the engineers began the definitive location 
 of the road. In the Baltimore American for July 14, 1828, 
 a notice was inserted by the railroad company to road- 
 makers and bridge-builders, setting forth that from August 
 I to August II, proposals for grading and masonry on about 
 twelve miles of the proposed road would be received at the 
 office of the company. Newspapers of other leading cities 
 of the country were requested to reprint this advertisement. 
 Grading and masonry work were first begun on 11% 
 miles of road. The average cost per mile of this work was 
 $17,000. The six miles of road nearest the city cost nearly 
 four times as much as the remainder of this block of road, 
 because the construction at the city end was begun at an 
 elevation of 66 feet above mid-tide and had to be carried 
 along at right angles to the courses of the streams. It was 
 believed that by beginning the road at such a height and in 
 such a direction, further extension would be practicable at 
 a very much smaller cost. It was estimated that the cost 
 of grading and masonry on the first forty miles would not 
 exceed $8,000 a mile, and that with the most liberal allow- 
 ance for laying the road with double tracks and completely 
 fitting the rails for the reception of carriages and the appli- 
 cation of motive power, the total cost per mile throughout 
 that distance would not exceed $17,000. These estimates, 
 it must be remembered, were made concerning an enter- 
 prise regarding the probable cost of which the data were 
 meager and uncertain. As soon as the work on the first 
 twelve miles was completed, proposals were received for 
 masonry and grading for the next twelve miles, and the 
 work was rapidly pushed on. 
 
 In the first annual report of the president of the Baltimore 
 and Ohio Railroad Company, dated October i, 1827, Mr. 
 Thomas had called attention to the fact that the enterprise 
 had been generally approved throughout the country, and 
 more particularly in those sections of the West immediately 
 interested in its success. He had noted the general willing- 
 ness of land-holders to give, free of cost, necessary ground 
 
22 The Economic History of the [296 
 
 for the road-bed. In his second report, a year later, the 
 president again remarked with pleasure the free cessions of 
 land along the proposed route, as well as the fact that the 
 right of quarrying stone had been given to the contractors. 
 The proprietors of EUicott's Mills — now Ellicott City — ^had 
 also donated a tract of ground for a depot. There was but 
 one unpleasant fact — a controversy with the Chesapeake 
 and Ohio Canal Company, the railroad company's rival, in 
 regard to the canal company's alleged pre-emption right to 
 certain land between the Point of Rocks and Cumberland, 
 along the Potomac river. " This controversy will probably 
 not retard our operations in the least degree," wrote Presi- 
 dent Thomas in 1828. He was mistaken, for prolonged 
 litigation, much expenditure of time, money and patience, 
 and the stoppage of the extension of the railroad beyond the 
 Point of Rocks for two years, were the consequences arising 
 from the efforts of the canal company to check the progress 
 of its rival. 
 
 During the year 1828 the capital stock of the company 
 was increased from $2,000,000 to $4,000,000 by the addi- 
 tional subscription of $1,500,000 by individuals' and by a 
 subscription of $500,000 by the state of Maryland. This 
 last-named subscription was obtained mainly through the 
 efforts of Mr. J. V. L. M'Mahon, and was doubtless the 
 first time in the history of this country that a state had 
 granted aid to a railroad corporation. The act authorizing 
 this subscription was passed March 3, 1828 (1827, Ch. 104, 
 Sec. 3). 
 
 Early in January, 1828, a memorial to Congress had been 
 drawn up by the president and directors of the company, 
 petitioning for a subscription by the United States to the 
 company's stock. The Senate committee to which the 
 memorial was referred reported a bill authorizing a subscrip- 
 tion of $1,000,000. The committee of the House of Repre- 
 sentatives also made a favorable report, but it being late in 
 
 ^ Original individual subscribers doubled their subscription, March 
 6, 1828. 
 
297] Baltimore and Ohio Railroad, 1827-1853. 23 
 
 the session when the committee reported, it would submit 
 no bill. The company therefore renewed its petition at the 
 next session of Congress in 1829, but, although the com- 
 mittees of both houses of Congress recommended a qualified 
 subscription to the company, the measure failed. It was said 
 at the time that the reason the company was unsuccessful in 
 this application was because of the opposition of the president 
 of the Chesapeake and Ohio Canal Company, who was at 
 this time chairman of the committee on roads and canals in 
 the House of Representatives.' But it must be remembered 
 that there was in 1829 and 1830 considerable honest differ- 
 ence of opinion as to whether the United States Constitution 
 gave power to the national government to make expendi- 
 tures for objects not clearly national in character. Presi- 
 dent Jackson had strongly expressed his opposition to aid- 
 ing state enterprises and schemes of internal improvement 
 by appropriations from the central government. 
 
 From whatever source the opposition may have come, 
 the company recognized that it must not hope for aid from 
 the national government. By the fall of 1829 the grading 
 and masonry upon twenty-five miles of the road had been 
 completed, and the first rails had been laid in the early part 
 of that year. Owing to the general advance in laborers' 
 wages at this time, to the difficulty of procuring stone suit- 
 able for bridges and culverts, to the extensive and unex- 
 pected beds of rock and hard clay through which the road- 
 bed had to be cut, and to the substitution of permanent 
 stone bridges or embankments over valleys where it had 
 been proposed to make use of wooden viaducts, the cost of 
 these twenty-five miles had considerably exceeded the orig- 
 inal estimate of $20,000 a mile. An injunction against the 
 railroad company by the canal company in this year had 
 at first compelled the railroad to cease its extension in Fred- 
 erick county. The injunction was, however, partly set aside 
 so as to allow the railroad to continue construction to the 
 
 ' W. P. Smith "History and Description of the Baltimore and 
 Ohio Railroad," p. 22. 
 
24: The Economic History of the [298 
 
 Point of Rocks, from which point to Cumberland the owner- 
 ship of the proposed routes of the two companies was in 
 dispute. 
 
 Upon the twenty-second of May, 1830, the first division 
 of the Baltimore and Ohio Railroad — ^thirteen and three- 
 quarters miles long, from Baltimore to Ellicott's Mills — was 
 opened for the transportation of passengers. The cars 
 needed for general traffic, however, were not ready until 
 early in June, but after that time the travel on the road was 
 constant. By the first of October, 1830, the receipts were 
 $20,012.36, although the road had only a single track and 
 was able to transport merchandise or produce during a few 
 months only. The freight oflfered for transportation was 
 about ten times the amount which the company was able 
 to handle. 
 
 The sight presented on that May day in 1830, upon the 
 occasion of the opening of the first railroad worthy of the 
 name in America, was far less imposing than that presented 
 upon a similar occasion to-day. There were merely a num- 
 ber of small open carriages, much resembling the old-style 
 stage-coaches, with wheels so constructed as to enable them 
 to run upon the tracks. Horses were used to furnish the 
 motive power. 
 
 The mode of locomotive power to be used upon the road 
 was by no means decided during the first year of the rail- 
 way's existence. Evan Thomas, a brother of the president, 
 even experimented with a car which he had fitted with sailsV 
 
 The railroad, being the first of its kind in the country, 
 
 ' Before the experiments with the sailing car the Baltimore and 
 Ohio Railroad made use of a " horse-power locomotive." A horse 
 was placed in a specially constructed car and made to walk on an 
 endless apron or belt and to communicate motion to the wheels by 
 means of cog-wheels. The machine worked fairly well, but one 
 day while drawing a car filled with representatives of the press, it 
 ran into a cow, the consequence being that the whole afifair tilted 
 over and rolled down an embankment. No one was badly hurt, but 
 the horse-power locomotive passed out of existence from that time. 
 Brown, " The History of the First Locomotives in America," 
 pp. 123-4. 
 
299] Baltimore and OUo Railroad, 1827-1853. 25 
 
 naturally attracted much attention, and people came from 
 considerable distances to see and travel upon this new and 
 strange road. 
 
 The trial of the first steam locomotive on the tracks of the 
 Baltimore and Ohio Railroad took place on August 25/ 1830. 
 The locomotive, which was the first intended for railroad 
 purposes ever built in America,^ was the invention of Peter 
 Cooper. It was scarcely more than a model, weighing but 
 a single ton, and was appropriately named the " Tom 
 Thumb." It was about the size of the hand-cars now used 
 by workmen upon the railroad. The boiler was a small 
 upright one, about the size of a modem kitchen boiler; its 
 cylinder measured but three and a half inches in diameter, 
 and its speed ,was gotten up by gearing. In order to secure 
 the necessary steam pressure, a sort of bellows was used, 
 which was worked by a pulley and cord passing over a 
 drum on one of the car wheels. This crude machine was 
 able to pull an open car of small dimensions from Baltimore 
 to Ellicott's Mills, thirteen miles, in an hour and twelve 
 minutes, and the return trip was made in fifty-seven minutes. 
 But during a race which this engine had the same day with 
 a similar car dfawn along a parallel track by a stage horse, 
 the band working the bellows of the engine slipped and 
 steam-power was ignominiously beaten by horse-power. 
 
 ^ Or Aug. 28, 1830. Saturday, according to W. H. Brown (p. 
 114). This account was given to Brown by Winans, who was 
 present upon this occasion. Cooper had tried some experimental 
 trips with his locomotive in 1829, but it did not act as well as' he 
 had expected and desired, so he changed his plan, and after some 
 delay made his first real experimental trip in 1830. 
 
 The Tom Thumb was built at the Mt. Clare works in 1829 
 (Brown, pp. 107, 108). 
 
 ' Upon the whole subject of early locomotives and railroads in 
 America, see the work of W. H. Brown (N. Y., Appleton & 
 & Co., 1871), " The History of the First Locomotives in America." 
 On Peter Cooper's " Tom Thumb " see especially pages 107 to 122 
 inclusive, containing a cut of the engine and an extract from a 
 lecture delivered by Mr. H. B. LatrobCj legal counsellor of the 
 company, before the Maryland Institute in 1868 upon the history 
 of the Baltimore and Ohio Railroad. 
 
26 The Economic History of the [300 
 
 Nevertheless the tiny engine was used for some time with 
 success upon the road. 
 
 The question of granting to the company the privilege of 
 laying tracks through the city of Baltimore from its depot 
 on Pratt street near Poppleton to the basin or harbor, so 
 as to facilitate the transportation of goods intended for ex- 
 port, directly to the vessels into which they were to be 
 loaded, was a question which caused many heated contro- 
 versies. In spite of all opposition the company prevailed, 
 and in April, 1831,^ the City Council gave permission to lay 
 the proposed tracks to the basin and thence parallel to the 
 entire water-front of the city as far as Jones Falls. At this 
 point, the city conveyed to the company two squares of 
 ground very favorably situated for the economical and con- 
 venient transaction of the business of the railroad. 
 
 The work of finishing the railroad as far as the Point of 
 Rocks had meanwhile been going steadily on, and on 
 December i, 1831, the road was opened to Frederick, a dis- 
 tance of 61 miles. Frederick was not directly upon the 
 main stem of the road, but was connected with it by a 
 branch road ^^2 miles long. On April i, 1832, the road 
 was opened to the Point of Rocks. Including the Frederick 
 branch, this made 72J4 miles of the road in active use after 
 this date. With the double track, switches, sidings, etc., 
 iSoy2 miles of track had now been completed. 
 
 The extension of the railroad to the Point of Rocks 
 had an immediate effect upon that place. Several ware- 
 houses were erected; inns, dwellings and other improve- 
 ments rapidly rose. The facilities for the transference of 
 produce from the Potomac river to the railroad were ample, 
 and the boatmen and farmers further to the west resorted 
 more and more to the Point of Rocks as the most conveni- 
 ent spot from which to reach the Baltimore market.'' It was 
 stated also that every species of agricultural product, lime, 
 
 ^ By act of Baltimore City Council, Session of 1831, Ordinance 
 No. 18. Approved April 4, 1831. 
 ^ Sixth Annual Report of the B. & O. R. R. Co. (1832), p. 4. 
 
301] Baltimore and Ohio Railroad, 1827-1853. 27 
 
 timber of various kinds, and even paving-stones had been 
 brought to Baltimore with profit to those making use of the 
 road. In return (although at an enhanced toll, yet still with 
 equally profitable results) plaster of paris, coal, boards, 
 bricks and scrap iron had been sent into the interior. The 
 existence of the road had also brought into use articles, in 
 the sparsely settled country through which the railroad 
 passed, which had before been valueless to their possessors. 
 Forests and quarries hitherto useless became sources of new 
 profit to the owners. 
 
 The mode of construction of the road to the Point of 
 Rocks was various and was in the nature of a series of 
 experiments.' The combination of the iron rail on granite, 
 the wood and iron rail on stone blocks, the wood and iron 
 rail supported by broken stone, the same supported by lon- 
 gitudinal ground-sills instead of broken stone, the log rail 
 formed of trunks of trees worked to a surface on one side 
 to receive the iron and supported by wooden sleepers, and 
 the wrought-iron rails in use on the English railroads, had 
 all been tried and formed at this time parts of the work. In 
 general, stone, wherever easily obtainable, had been pre- 
 ferred to wood for supporting the rails, because of its sup- 
 posed greater durability, but subsequent experience proved 
 that this preference was without good reason. 
 
 By this time any question as to the suitability of the rail- 
 way as a mode of transporting persons and merchandise 
 was practically settled by the successful operation of this 
 road. The important question to settle was the kind of 
 locomotive needed. It was evident that horses would not 
 suffice for the long distances and the heavy traffic, and that 
 steam must be employed. It was thought that the English 
 locomotives were not adapted to this American railway, 
 with its steep grades and sharp curves — some of them not 
 more than 400 feet in radius. The Peter Cooper engine was 
 
 ^ Almost total reconstruction of this portion of the railroad was 
 necessary within lo years. 
 
28 The Economic History of the [302 
 
 altogether inadequate. It was determined to advertise for 
 American locomotives. 
 
 On January 4, 1831, the company published a notice offer- 
 ing $4,ocx) for the most approved engine which should be 
 delivered for trial upon the road on or before June i of the 
 same year, and offering $3,500 for the engine adjudged the 
 next best. It was specified, among other things, that these 
 engines must burn coke or coal; must consume their own 
 smoke; must not exceed three and a half tons in weight; 
 be capable of regularly drawing on a level road fifteen tons 
 fifteen miles per hour; steam pressure not to be over 100 
 pounds per square inch; company to have the right to test 
 boilers, fire-tubes, cylinders, etc.; each engine to be pro- 
 vided with two safety valves, one of them out of reach and 
 control of the engineer; engine and boiler to be supported 
 on springs and to rest on four wheels, with the top of the 
 chimney not more than twelve feet from the gfround, and to 
 be fitted with a mercurial gauge with index to show the 
 steam pressure above fifty pounds per square inch and 
 constructed to blow out at 120 pounds, etc., etc. 
 
 When the time specified for the trial had arrived, three 
 locomotives were submitted for competition. But one, called 
 " The York," (from its having been built at York, Pa.), stood 
 the test. It had been built by Davis and Gartner and 
 weighed 2,% tons. It was mounted on wheels such as those 
 on the common cars, thirty inches in diameter, and ordin- 
 arily made the trip between Baltimore and Ellicott's Mills, 
 drawing four cars, making up a gross weight of 14 tons, 
 in one hour. On straight parts of the road and for short 
 distances it had reached the speed of thirty miles an hour. 
 It easily ran over curves as small as 400 feet radius, but 
 owing to its light weight was of little use when heavy grades 
 were to be ascended. The success of this engine and the 
 satisfaction that it gave in its regular use after its trial led 
 President Thomas to remark in his annual report in 1832 
 that the engine was but " as the commencement of a series 
 of experiments which will even more fully than has yet been 
 
303] Baltimore cmd Ohio Railroad, 1827-1853. 29 
 
 done, prove the adaptation of steam and railroads to every 
 part of our country and for all purposes of trade and travel." 
 During 1832 a number of other mechanics and inventors 
 were engaged in the construction of locomotive engines. 
 Davis and Gartner placed a second engine, the " Atlantic," 
 upon the rails of the Baltimore and Ohio Railroad during 
 that year, and this engine proved quite as successful as their 
 first one. 
 
 In 1832 the controversy so long pending between the 
 Chesapeake and Ohio Canal Company and the Baltimore 
 and Ohio Railroad Company came to a final settlement. 
 The Court of Appeals by a vote of three judges to two — the 
 sixth judge of the court being ill and not voting — reversed 
 the decision of the Chancery Court of Maryland and sus- 
 tained the contention of the canal company in its claim to 
 a prior right of way between the Point of Rocks and Harp- 
 er's Ferry. The railroad company was not to appropriate 
 or use the land between these points until the canal company 
 had laid out its route. It was believed that the canal com- 
 pany would probably use so much of the narrow available 
 space between these points as to exclude the railroad. 
 
 The railroad company, beaten in the courts, had still sev- 
 eral alternatives left. It might continue the road alongside 
 the canal between the two points in question upon such 
 ground as the canal company might leave vacant; it might 
 cross the Potomac river at the Point of Rocks and con- 
 tinue its line along the Virginia shore of the river; it might 
 tunnel through the mountain spurs ; finally, it might succeed 
 in procuring permission from the canal company to con- 
 struct jointly the two works from the Point of Rocks to 
 Harper's Ferry. 
 
 The last-named plan was the first one tried. While the 
 case had still been in the Chancery Court, the chief engi- 
 neers of the two companies, acting as commissioners of the 
 court, had reported that from surveys made by them the 
 plan was feasible and that its execution would involve an 
 increased cost of about $7,000 to each company. In the 
 
30 The Economic History of the [304 
 
 proposition submitted by the railroad company to the canal 
 company, the former offered to bear the whole increased 
 expense of the undertaking ($14,000) if the canal company 
 would permit the proposed joint construction. This offer 
 the canal company declined, on the ground that it might 
 work harm to the canal. 
 
 The legislature of Maryland now intervened. Both enter- 
 prises were of too much value to the state and to the country 
 at large to permit the usefulness of either tO' be impaired by 
 friction between them. A resolution was first passed by 
 both houses of the legislature urging an accommodating 
 spirit upon the canal company towards the railroad company 
 and a modification of the plan of the canal so as to permit 
 the joint construction of both enterprises. In answer to 
 this appeal the railroad company offered to construct the 
 canal at the price at which it had been put under contract, 
 to complete it by a fixed date, to guarantee it to stand for 
 five years, and to keep it in thorough repair during that time. 
 To this offer the canal company proposed that the railroad 
 company should devote the unexpended portion of its capi- 
 tal to the completion of the canal to Cumberland and 
 abandon for the time all idea of continuing the railroad 
 beyond the Point of Rocks. 
 
 The railroad immediately rejected this offer as unreason- 
 able. Things were, therefore, again at a standstill. In the 
 legislative session of 1832-33 the Committee on Internal 
 Improvements in the House of Delegates was directed to 
 examine the region in question and to report upon the feasi- 
 bility of joint construction of the two works. This report 
 was so hostile to the canal company that relations became 
 all the more strained. Matters looked very dark for the 
 extension of the railroad in Maryland, when it was pro- 
 posed to appoint a joint committee of the two branches of 
 the legislature for the purpose of harmonizing the differ- 
 ences between the two companies without attempting to 
 force concessions. 
 
 The proposition was favorably received, the committee 
 
305] Baltimore and Ohio BaMroad, 1827-1853. 31 
 
 was organized, and investigations were made with the co- 
 operation of the companies interested. A report, embody- 
 ing a compromise, was submitted, and a law, practically the 
 same as the compromise report, was passed by the legisla- 
 ture, March 22, 1833. 
 
 By this law the consent of the canal company to the joint 
 construction of the railroad with the canal through the 
 region between the Point of Rocks and Harper's Ferry was 
 recorded. It was provided, too, that when completed to 
 Harper's Ferry the railroad was to subscribe for 2,500 shares 
 of the stock of the canal company, and that the railroad com- 
 pany was to be allowed to begin the construction of its road 
 at the Point of Rocks at any time after May 10, 1833. The 
 canal company was bound to prepare the road-bed through 
 the passes of the Point of Rocks for one hundred thousand 
 dollars and to bear the expense of any additional cost of 
 grading. The width of the canal was to be maintained at 
 fifty feet, but if the railroad became impracticable at any 
 point in the passes with the canal fifty feet wide, its width 
 might be contracted to forty feet, if the commissioners — 
 provided for in a subsequent part of the law — deemed neces- 
 sary. The canal company was given the right to grade the 
 road-bed within a limited time, preserving a greater width 
 for the canal than forty feet if it differed in opinion with the 
 commissioners. 
 
 The railroad, on the other hand, was to have a breadth of 
 not less than twenty feet through the passes of the Point of 
 Rocks, and a curvature of not less than 400 feet radius, and 
 a grade not greater than thirty feet to the mile. To deter- 
 mine points at issue between the two companies, as to the 
 construction of the road, a board of commissioners was to 
 be created, composed of three engineers, one to be chosen 
 by the canal company, one by the railroad company, and 
 the third by the President of the United States. These 
 commissioners were to determine the damage^ payable by 
 the railroad company to the canal company for any inter- 
 ruption — during the construction or in consequence of it — 
 
32 The Economic History of the [306 
 
 of the use of any part of the canal. It was provided, too, 
 that a fence was to be erected, under the direction of the 
 commissioners, between the two works, sufficient to secure 
 the horses used on the canal from accidents from the pas- 
 sage of the locomotives. It was found, however, that a 
 fence was out of the question, because it would act as a 
 barrier to the free flow of melted snow and mountain wash- 
 ings which would thus accumulate and flood the tracks. 
 Therefore the railroad company was obliged to use horses 
 to draw its cars between the Point of Rocks and Harper's 
 Ferry until the objectionable clause was repealed. 
 
 Under this compromise act the railroad company paid the 
 canal company $266,000 in monthly instalments, which 
 amount President Thomas of the Baltimore and Ohio said 
 that he did not consider more than sufficient fully to cover, 
 as was intended, the cost of construction of those portions of 
 the railroad which the canal company had undertaken to 
 build, as well as to indemnify it for the loss and damage 
 to which the canal company, during the period of construc- 
 tion, must necessarily be subject. Besides it was important 
 for the railroad to reach Harper's Ferry as soon as possible.' 
 Among the chief reasons for this was, that at that point 
 was the northern terminus of the Winchester and Potomac 
 Railroad, which bade fair to transfer to the Baltimore and 
 Ohio Railroad at Harper's Ferry, the passengers and pro- 
 duce gathered along its thirty miles of route in Virginia. 
 Winchester, itself a thriving town, would be brought thus 
 into close connection with Baltimore, probably to the mutual 
 advantage of the two places. 
 
 Persons who had invested their money in the railroad 
 were evidently becoming impatient for some returns, for 
 President Thomas in his report in 1833 remarked that the 
 board of directors saw that much was still to be done before 
 those pecuniary advantages originally anticipated could be 
 realized to the stockholders. Indeed, instead of having 
 
 ' Seventh Annual Report of the B. O. R. R. Co., p. S (1833). 
 
307] Baltimore md Ohio Railroad, 1827-1853. 33 
 
 money to distribute among the stockholders, the need of 
 funds to continue the construction of the railroad was so 
 urgent that at the session of the Maryland legislature of 
 1833 the state treasurer was authorized to pay to the com- 
 pany the whole of the state's subscription to the stock. The 
 Mayor and City Council of Baltimore also having passed 
 an ordinance to the same effect as regarded the city's shares 
 of stock, the company found itself in possession of the neces- 
 sary resources to continue the road to Harper's Ferry. The 
 canal company having built the railroad through the passes 
 of the Point of Rocks, and the railroad company, with the 
 necessary additions to its resources, having been able to con- 
 tinue the construction at the point the canal company had 
 left it, the whole route to Wager's Bridge, a point opposite 
 Harper's Ferry on the Maryland side of the Potomac, was 
 opened on December i, 1834. Here the further progress 
 of the railroad ceased until the summer of 1836, when sur- 
 veys for the extension of the road westward were begun. 
 
 Although there was a general decline in the business of 
 the country at large during 1834, yet there was a steady 
 increase in the business of the Baltimore and Ohio Railroad. 
 To this the president of the railroad calls attention in his 
 report for that year,' saying that this increase was not attri- 
 butable to the augmentation of business from any one place, 
 but due rather to the multiplication of places with which 
 trade was carried on by means of the railroad. The ex- 
 penses of the railroad had also been reduced by the econo- 
 mical employment of steam power. 
 
 As the Baltimore and Ohio Railroad was the foremost of 
 the railroads in America, it had to solve many problems in 
 the technique of railroading during the early years of its 
 existence, and many improvements in locomotives, rolling 
 stock and road-building were introduced by the engineers 
 and mechanics of the road. 
 
 Beginning in 1830, experiments were made to test the 
 
 '■ Eighth Annual Report of the B. & O. R. R. Co. (1834), p. 12. 
 
34 The Economic History of the [308 
 
 comparative resistance of cars equipped with the Winans 
 anti-friction boxes and those with hardened steel journals 
 and chilled bearings. The friction on a straight, level road 
 was found to amount to 2T^ of the load in the case of the 
 latter equipment and to -^^ part of the load with the Winans 
 invention. The combined cylindrical and conical car wheels, 
 which allowed cars to go safely around sharp curves of a 
 small radius, and which were especially useful in turning 
 the corners of city streets, were the invention of Jonathan 
 Knight, then chief engineer of the road.' When locomo- 
 tives took the place of horse-power, the light coach wheels 
 were replaced by cast-iron wheels, to the perfection of which 
 Ross Winans, John Elgar, Jonathan Knight and Phineas 
 Davis all contributed. Thousands of these cast-iron wheels 
 were made at Ross Winans' shops, not only for American 
 roads, but also for export for German and Swiss roads, 
 where they were used up to 1851. 
 
 Next to the improvements in steam locomotives during 
 these years the most striking development was probably 
 that made in the cars. These, built originally very like the 
 stage-coaches of the day and mounted on four light cast-iron 
 wheels, were gradually changed and improved, owing to the 
 demands for greater steadiness and convenience in coaches, 
 until in his report dated October i, 1833, the superintendent, 
 Ross Winans, announced that he was building three car 
 bodies to fonm one coach on eight wheels to carry sixty 
 passengers. This was the beginning of the modern eight- 
 wheel car."" Soon after, eight-wheel cars were used through- 
 
 " The credit for this invention was claimed by James Stimpson, 
 an inventor, originally from Massachusetts, who was also the in- 
 ventor of jointed axles for railroad cars, and who claimed that he 
 had invented the mode of placing rails so that cars could with 
 safety go around the small curves of city streets. James Stimpson 
 had a long series of suits in the courts in order to protect his 
 inventions, some of which suits he won. 
 
 ^ Winans patented the eight-wheel car, but the courts decided 
 adversely to his claim, on the ground of prior use, in that two 
 four-wheel cars counseled by a pole and "bolster" (the use of 
 which on the B. & O. to carry 40-foot timber stringers had sug- 
 
309] Baltimore and Ohio Railroad, 1827-1853, 35 
 
 out the line for both passenger and freight traffic, and spe- 
 cial cars were provided for baggage, which had before this 
 time been carried in racks upon the tops of the coaches. 
 
 In September, 1832, steel springs were first placed upon 
 the locomotive "York" and its tender, which experiment 
 was so successful that springs of steel were also put on 
 some freight cars with equal success. By the summer of 
 1833 it was thought advisable for the company to begin the 
 manufacture of its own engines and to keep them in repair, 
 rather than have all these things done by contract, as had 
 theretofore been the case. Accordingly the company began 
 to erect shops in Baltimore where the great Mount Clare 
 works now stand. Up to July, 1834, the company had had 
 but three locomotives, the " York," the " Atlantic," and the 
 " Franklin." Many cars, especially freight cars, were still 
 drawn by horse or mule power. By the fall of 1834 five 
 more locomotives, all American built — ^the "Traveller," 
 "Arabian,"' "Mercury," "Antelope" and "American," the 
 last two having been built in Baltimore — ^were put upon the 
 road. Eight more locomotives had been ordered and were 
 then under contract. 
 
 gested the idea of an eight-wheel car to Winans) had already been 
 generally used, as well as a similar arrangement for transporting 
 large blocks of granite at Quincy, Mass. Cf. Address of Prest. 
 Mendes Cohen before American Society of Civil Engineers, 1892, 
 p. 551 of the " Proceedings," etc. 
 ' This was the type of the famous " Grasshopper engine." 
 
36 The Economic History of the [310 
 
 CHAPTER III. 
 
 Extension. Harper's Ferry to Cumberland. 
 (1834-1842.) 
 
 By the compromise with the Chesapeake and Ohio Canal 
 Company the Baltimore and Ohio Railroad Company had 
 agreed not to continue its road along the banks of the 
 Potomac beyond Harper's Ferry until the canal should be 
 finished to Cumberland, provided that this were done within 
 the time allowed by the charter of the canal company. The 
 route to the West through Virginia was open to the railroad, 
 but the president and directors did not at this time deem 
 it advisable to extend their railroad through that state. 
 
 The eight annual report of the railroad (1834) announced 
 that in the opinion of the board of directors " the immediate 
 interest of the stockholders as well as of the city of Balti- 
 more and the state of which Baltimore is the heart and 
 emporium, now lies in the completion of the Chesapeake 
 and Ohio Canal to Cumberland. For the present, therefore, 
 the board would not think of making the railroad parallel 
 to the canal, even if it had the power, but taking up the 
 route where the canal terminates at Cumberland, would 
 push the railroad across the mountains upon the trace 
 originally intended for it and to the point of its original 
 destination. The two enterprises would then be united in 
 interest, instead of hostile, and jointly afford the desired 
 communication from Baltimore to the West."' This plan 
 was, however, not carried out. 
 
 In the last report issued by Philip E. Thomas as presi- 
 dent of the railroad company,' attention is called to the fact 
 that in spite of many obstacles the business of the road had 
 
 ' Eight Annual Report B. & O. R. R. Co. (1834), pp. 14-15. 
 "Ninth Annual Report B. & O. R. R. Co. (1835), p. 4. 
 
311] Baltimore and Ohio BaMroad, 1827-1853. 37 
 
 increased during the fiscal year ending October i, 1835. 
 Acknowledgment is made of the liberal policy of those 
 Baltimore merchants to whom the new trade of the 
 interior of the state and the West generally had been 
 directed, and of their title to the thanks of the railroad com- 
 pany and the community generally for the efiforts they had 
 made to render the Baltimore market popular and attractive 
 in those sections of the country where hitherto it had been 
 but little known. 
 
 This was a time of considerable activity in railroad con- 
 struction. The Baltimore and Port Deposit Railroad when 
 completed would connect with a system of railroads running 
 from Port Deposit through Philadelphia to New York, 
 giving a through route from that city to Washington, or 
 from New York through Baltimore and via the Winchester 
 and Potomac Railroad — ^with which the Baltimore and Ohio 
 Railroad was now practically connected — ^to Winchester, 
 situated in the heart of Virginia, about 115 miles from Bal- 
 timore. The town of Chambersburg in Pennsylvania 
 desired to secure connection with these arteries of com- 
 merce and asked for an examination of the country be- 
 tween that place and the terminus of the Baltimore and Ohio 
 Railroad at Harper's Feny. In accordance with this re- 
 quest, Benjamin H. Latrobe, later the chief engineer of the 
 Baltimore and Ohio Railroad, was detailed for the duty. He 
 reported that a railroad 45 miles long would connect the 
 two points, and that one inclined plane with stationary 
 power would be necessary. The cost of such a road he 
 estimated at about $10,000 per mile. However, nothing 
 more was done in regard to this proposed road at this time. 
 
 The cities of Pittsburgh and Wheeling were both desirous 
 of being connected with Cumberland by railroad. At the 
 request of the people of Wheeling, Jonathan Knight, the 
 chief engineer of the Baltimore and Ohio Railroad, made 
 a reconnoissance between these points in the summer of 
 1835. He reported that the mountains between Cumber- 
 land and the western waters could be passed by locomo- 
 
38 The Economic History of the [312 
 
 tives and their trains, without the use of stationary power or 
 indined planes, and that a road to Pittsburgh was just as 
 practicable as one to WheeUng. The directors of the Bal- 
 timore and Ohio Railroad were of the opinion that the 
 means by which these proposed roads were to be constructed 
 ought to come from all those interested in the completion 
 of the work, since such a line would be for their mutual 
 advantage. Therefore it was proposed that the state of 
 Maryland, the city of Baltimore and individual subscribers 
 should furnish the means to build the railroad from Harper's 
 Ferry to Cumberland, and that Pittsburgh and Wheeling 
 should supply the funds necessary for the construction of 
 their respective branches from Cumberland. The total 
 expense of building these proposed roads was roughly esti- 
 mated at $4,600,000. Some time before, the city of Wheel- 
 ing had tendered a subscription of $500,000 for this purpose. 
 This plan was not immediately carried out, although the 
 railroad was completed to Wheeling in 1853, and later on to 
 Pittsburgh via the Pittsburgh and Connellsville Railroad, a 
 branch of the Baltimore and Ohio. In both cases aid for 
 the construction of the road came from the city to which 
 the railroad was extended. 
 
 At the December session of the Maryland legislature of 
 1835-36 the board of directors of the railroad asked for aid 
 from the state in order to complete the railroad to Pitts- 
 burgh and to Wheeling, and at about the same time a 
 similar application was made to the Mayor and City Council 
 of Baltimore. The city responded by resolving to subscribe 
 the sum of three million dollars ($3,000,000) to the capital 
 stock of the company whenever the legal difficulties' which 
 prevented at that time the extension of the railroad in an 
 unbroken line from Harper's Ferry to the western waters 
 should be removed. In the legislature the bill to aid the 
 railroad was opposed and postponed until the extra May 
 session. In the meantime a largely attended convention 
 
 ^ Agreement with the Chesapeake and Ohio Canal Company. 
 
313] Baltimore and Ohio Railroad, 1827-1853. 39 
 
 was held in Baltimore, to which delegates from Pittsburgh 
 and Wheeling came, and in which various subjects con- 
 nected with the internal improvements of the state were 
 fully discussed. 
 
 One result of this convention was that at the May session 
 of the legislature a law^ was passed, containing among other 
 subscriptions for the furtherance of internal improvements 
 in Maryland, one of three million dollars ($3,000,000) to 
 the capital stock of the Baltimore and Ohio Railroad. The 
 same law released the company from the restrictions that 
 prevented the extension of the railroad westward from 
 Harper's Ferry, and thereby enabled it to comply with the 
 condition annexed to the subscription by the Mayor and 
 City Council of Baltimore. But before the law could go 
 into efifect the assent of both the Chesapeake and Ohio 
 Canal Company and the Baltimore and Ohio Railroad Com- 
 pany was necessary. The consent of the railroad company 
 was, of course, immediately forthcoming at a general meet- 
 ing of the stockholders, July 18, 1836. Not so, however, 
 with regard to the canal company. Old jealousies and con- 
 tentions had not been forgotten and the canal company took 
 no action in the matter. The directors of the railroad com- 
 pany were authorized by the stockholders to endeavor to 
 secure the canal company's assent to the law. The directors 
 of the railroad finally succeeded by means of a written agree- 
 ment in removing the apprehensions of the canal company 
 that any of the provisions of the law regarding the joint con- 
 struction of the railroad and the canal would, if carried into 
 operation, materially impair the permanence or usefulness 
 of the canal, and after considerable delay the law went into 
 effect. The subscription of the state treasurer for 30,000 
 shares was received September 23, 1836, and that of the 
 Mayor of Baltimore, September 27, 1836. 
 
 The subscription of $3,000,000 by the state was made to 
 depend upon certain important conditions. The stockhold- 
 
 ' Acts of 183s, ch. 395. Passed June 4, 1836. 
 
40 The Economic History of the [314 
 
 ers of the railroad company in general meeting were to 
 bind the company in a written agreement to guarantee to 
 the state of Maryland after the expiration of three years 
 from the payment by the state of each of the instalments 
 on the stock subscribed, the payment from that time on, 
 out of the profits of the company, of six per cent per annum, 
 payable semi-annually, on the amount of the money paid to 
 the company, until the clear annual profits of the railroad 
 should be more than sufficient to discharge the interest 
 payable to the state of Maryland, and adequate, besides, to 
 a dividend of six per cent per annum among its stock- 
 holders. Thereafter the state was to receive upon the stock 
 it held a perpetual dividend of six per cent per annum out 
 of the profits of the company as declared from time to time, 
 and no more, and all the profits above six per cent per 
 annum were to be distributed among the other stockholders 
 according to their interests in the company. In considera- 
 tion of this guarantee of interest to the state, the railroad 
 company was authorized to increase the charge for trans- 
 portation of passengers to any amount not exceeding one 
 cent per mile for each person, in addition to the charge 
 already authorized to be made by the company, making the 
 aggregate four cents per person per mile. 
 
 The guarantee required of the stockholders was given at 
 a general meeting held in Baltimore, July i8, 1836.^ 
 
 ' This " preferred stock " has had an interesting history. The 
 state of Maryland paid its subscription in s per cent sterling 
 bonds, which could not be sold advantageously for many years. 
 At the time of the receipt of the bonds the company charged itself 
 on its books with the bonds at their face value, $3,200,000. The 
 account stood in that form until September 30, 1853, when it was 
 closed with an entry of $3,000,000 to " preferred stock " and the 
 transfer of $200,000 to the account of " Interest west of Cumber- 
 land." This " preferred stock " was sold by the state of Maryland 
 (M'd. Laws, 1842, ch. 301), and eventually about $1,000,000 worth 
 came into the possession of the Johns Hopkins University. Six 
 per cent interest was paid on this stock until the half-year ending 
 June 30, 1896, when further payment was refused. This has led to 
 the case now in the Circuit Court of the United States for the Dis- 
 trict of Maryland (The Mercantile Trust Company vs. The Balti- 
 
315] Baltimore and Ohio Railroad, 1827-1853, 41 
 
 The president's report for 1836 reveals the unsatisfactory 
 financial condition of the road. The following table of rates 
 is quoted to show, by comparison with charges authorized 
 by the laws of other states, that the rates on the Baltimore 
 and Ohio as fixed by law were too low. 
 
 Railroads Persons Goods per ton 
 
 KauroaoB. pg^ ^jig_ pg, ^^jjg 
 
 Petersburg 5 cents. 10 cents. 
 
 Winchester and Potomac . 6 7 
 
 Portsmouth and Roanoke 6 8 
 
 Boston and Providence. . 5 10 
 
 Boston and Lowell 3 J4 7 
 
 Mohawk and Hudson ... 5 8 
 
 Baltimore and Ohio.i ^^ ^ Eastwardiy 4 
 
 ' law 4 Westwardly 6 
 
 In the absence of competition other than the Chesapeake 
 and Ohio Canal, the railroad might profitably have raised 
 its rates much higher had there been no legal restriction. 
 As it was, not only was no dividend declared during the 
 fiscal year ending October i, 1836, but the six million dol- 
 lars subscription of the city and state not having been avail- 
 able, an instalment of five dollars per share of stock had to be 
 called for. The revenues had fallen off — a sign portentous 
 of the crisis of 1837 — and the expenditures had been heavy. 
 The cost of constructing the viaduct over the Potomac 
 river at Harper's Ferry was very great, and a large and 
 constant outlay was required for" new engines and cars. 
 Extensive repairs had been necessary, for the railroad as 
 originally constructed was largely experimental and many 
 parts of it were ill calculated to stand the strain of the heavy 
 
 more and Ohio Railroad Company et al. in re Johns Hopkins 
 University, petitioner), the point of which is to decide whether the 
 interest must be paid or whether the provisions of the law of 1836 
 have been complied with and the railroad company released from 
 interest payments on this stock unless that interest is earned on the 
 whole capital stock of the railroad. 
 
42 The Economic History of the [316 
 
 traffic for which it soon began to be used. Therefore the 
 accruing revenue for these purposes was used in anticipa- 
 tion of the payments on instalments of stock. In fact the 
 above instalment of $5 had been called for in order to repay 
 money borrowed. To offset this, the amount that had been 
 applied to construction of the main stem, and not to general 
 expenses other than construction, was to be divided by the 
 number of shares of stock of the main stem and each share 
 credited with its proportion as so much paid in. It was 
 contended in this report that the reason that the Baltimore 
 and Ohio did not pay was because it was not completed. 
 All the railroads in the country that had been completed 
 were paying very well, it was claimed. 
 
 The legislature at its extra session in May, 1836, had 
 passed another law of importance to the railroad. By this 
 act the company was released from its obligation to erect 
 a board fence between the railroad and the canal from the 
 Point of Rocks to Harper's Ferry as a condition precedent 
 to the use of steam between the two places, provided that 
 the railroad company would first tender to the canal com- 
 pany the price of a " post and rail fence " for that distance. 
 As the construction and existence of such a fence had been 
 impracticable, the railroad company had been compelled to 
 use horse and mule-power between these points at a great 
 expense. 
 
 The tenth annual report also gives an account of recon- 
 noissances and surveys of the route along the Potomac 
 westward from Harper's Ferry and of the country west of 
 Cumberland as far as Wheeling. Mention is also made of 
 an extension by the Maryland legislature of the time allowed 
 for the completion of the main stem of the railroad within 
 the state from July 4, 1838 — ^the time fixed by the act of 
 incorporation — to July 4, 1843.' 
 
 Louis McLane assumed his duties as president of the 
 Baltimore and Ohio Railroad in April, 1837, and his first 
 
 ' By acts of 1835, ch. 245. Passed March 28, 1836. 
 
317] Baltimore and Ohio Railroad, 1827-1853. 43 
 
 report appeared the following October. That the year was 
 a critical one is easily read in and between the lines of this 
 report. The cost of constructing the main stem had ex- 
 ceeded the capital paid in by $202,968.94. This had been 
 supplied by using $61,200' of a. million dollar loan negotiated 
 by the railroad company and payable January i, 1854, and 
 by notes of the company issued to the amount of $141,768.94. 
 The last-named amount was to be paid by the two instal- 
 ments on the capital stock which were due September 30 
 and October 31, 1837, amounting together to $150,000. 
 
 At a meeting of the directors held in July, 1837, a com- 
 mittee was appointed consisting of the president and five 
 members to investigate fully the aflfairs of the company, 
 to inquire into the practicability of reducing expenditures 
 and of providing an efficient and economical organization 
 in all departments. It was clear that the road must be in 
 a large measure completely and promptly rebuilt in a more 
 thorough manner than it had been built at first. It was 
 decided that for this reconstruction the portion of the capital 
 yet unpaid would furnish the readiest and most certain 
 resource. In the then existing condition of the company 
 and the money market it was felt that proper reliance could 
 not be placed upon loans, even if they could be obtained 
 at the heavy rates of interest then current. The revenue 
 could thus be devoted to paying a dividend. This cautious 
 policy the company followed. 
 
 In the fall of 1837 the sum of $15 was still due upon each 
 share of the stock, making in the aggregate $450,000, and 
 this was devoted to the reconstruction of the road. The 
 stockholders were called upon to pay this sum in instalments 
 of $2.50 each in August, September, October and November, 
 1838, and in January and March, 1839, respectively. During 
 1838 the reduction-of-expenses policy was carried out with 
 
 ^ This sum was part of the $i,ooo,ckx) loan of 1834 made by the 
 Baltimore and Ohio to purchase stock in the Washington Branch, 
 and represented the proceeds of the loan not required for the pur- 
 pose. It was the first bond issue of the company. 
 
44 The Economic History of the [318 
 
 success, so that the income of the road exceeded the expen- 
 ditures by more than $7,000. During this year also the 
 company made active efforts to secure the necessary funds 
 and legislation to extend the railroad farther westward. 
 
 In the course of the year B. H. Latrobe made a full and 
 careful report of the surveys of the country between Harp- 
 er's Ferry and Pittsburgh and Wheeling. He expressed 
 the opinion that it was practicable to locate a satisfactory 
 route to the Ohio river, embracing both cities, at the maxi- 
 mum gradient of 66 feet per mile, and that with a single 
 track of the best construction from Cumberland to both 
 these points the whole of the work from Harper's Ferry 
 ought not to exceed $9,500,000. 
 
 In order to extend the road to Wheeling it was necessary 
 to secure the extension of the time during which the rail- 
 road company might have the right to build its road through 
 Virginia. By the original permission which Virginia had 
 given (by the confirmation of the Maryland act of incorpora- 
 tion of 1827), the time allowed the railroad to build in Vir- 
 ginia expired in July, 1838. After considerable difiEculty 
 the passage of a law' was obtained in 1838 extending the 
 time five years. But this law provided that the extension 
 of time was granted only upon condition that the road be 
 carried into Virginia at Harper's Ferry and thence con- 
 tinued through that state fo a point about five and a half 
 miles below Cumberland. It was provided, too, that 
 Wheeling was to be one of the termini of the rpad. Be- 
 sides a subscription of $302,100^ which had been made by 
 the State of Virginia a short time before, this law author- 
 ized an additional subscription by the state of $1,058,420 — 
 two-fifths of the estimated cost of so much of the road as 
 was required to be built in Virginia between Harper's Ferry 
 and Cumberland. By this law the railroad company was 
 compelled either to abandon altogether the extension of the 
 
 ' Acts of Virginia Assembly, 1838, ch. 159. Passed April 2, 1838. 
 * Acts of Virginia Assembly, 1836, ch. 136. Passed March 28, 1837. 
 
319] Baltimore mid Ohio Railroad, 1827-1853. 45 
 
 road to Wheeling or to leave the State of Maryland for 
 nearly the entire distance between Harper's Ferry and Cum- 
 berland. 
 
 The validity of the act of the Virginia legislature depended 
 upon its acceptance by the stockholders of the railroad, in- 
 cluding the state of Maryland. Preparatory to accepting 
 the act it was imperative that it should first be determined 
 whether a crossing at Harper's Ferry into Virginia was 
 practicable. There were two possible ways for the railroad 
 to cross the Potomac river at this point: either to secure 
 permission from the Winchester and Potomac Railroad 
 Company to occupy and make use of about six miles of its 
 road, or to secure permission from the national government 
 to occupy a part of the government property at Harper's 
 Ferry. The Winchester and Potomac Railroad Company 
 refused permission to make use of its road, but in November, 
 1838, an agreement was made with the Secretary of War at 
 Washington whereby the use of the government land was 
 granted to the railroad company. At a meeting of the 
 stockholders, November 13, 1838, at which 88,871 shares 
 of stock were represented, the Virginia law was accepted. 
 The principal reason which induced the stockholders to 
 build their railroad outside of Maryland for nearly a hun- 
 dred miles was that Wheeling was regarded at that time as 
 an indispensable terminus of the road. Other considera- 
 tions also operated, such as the trade which was expected 
 to come from the fertile valleys of the regions bordering on 
 the tributaries of the Potomac river; the avoidance of any 
 collision with the Chesapeake and Ohio Canal, then far 
 advanced in its construction; and finally, the much greater 
 economy in constructing the railroad through Virginia. 
 
 From the surveys and estimates that had been made, it 
 was calculated that the difference between the cost of con- 
 structing the road through Virginia and through Maryland 
 would be not less than $2,083,917 in autual outlay in money, 
 and really equal to not less than $2,625,400 in actual equiva- 
 lent capital. When to this there was added the sum of 
 
46 The Eeonmnic History of the [320 
 
 $2,358,420, the joint contributions of the state of Virginia and 
 the city of Wheehng — all of which would have necessarily 
 been relinquished had the stockholders voted to abandon 
 the idea of constructing the railroad in Virginia — ^the differ- 
 ence in favor of following the Virginia route amounted to 
 $4,983,420 in actual and equivalent capital. With these sub- 
 scriptions from Wheeling and Virginia just mentioned, the 
 apparent resources of the company to complete the railroad 
 to Pittsburgh and Wheeling were as follows: 
 
 Subscription by state of Maryland $3,000,000 
 
 Subscription by city of Baltimore 3,000,000 
 
 Subscription by state of Virginia 302,100^ 
 
 Additional subscription by state of Va. . 1,058,420^ 
 Subscription by the city of Wheeling. . . 1,000,000 
 
 $8,360,520 
 
 Estimated cost of completing the road.. $9,500,000 
 Amount subscribed 8,360,520 
 
 Amount still required $1,139,480 
 
 The subscription of the city of Baltimore was limited by 
 the terms of the ordinance authorizing it to the construction 
 of the railroad between Harper's Ferry and Cumberland. 
 It was payable in cash at the rate of not more than $1,000,000 
 per year. To raise this sum the city commissioners of 
 finance were authorized to issue city stock paying six per 
 cent interest. But the condition of the money market in 
 1838, 1839 and 1840 was such as to render it impossible to 
 put these stocks on the market at par. Therefore, instead 
 of trying to float this large amount of city securities, the city 
 commissioners of finance at first borrowed the money 
 needed for the instalments called for by the railroad directly 
 from the banks of Baltimore, and in order to meet the inter- 
 
 ' Repealed by acts of Virginia Assembly, 1846, ch. 99, sec. 3. 
 
321] Baltimore md Ohio Railroad, 1827-1853. 47 
 
 est on the loans the City Council levied a direct tax to cover 
 the amount of interest for the first year. These loans were 
 made by the banks upon deposits of city stock as security. 
 
 Later on the stringency in the money market led to a 
 very interesting but not altogether successful financial 
 scheme. At a meeting of the directors of the company held 
 in the autumn of 1839 ^* '^^^ decided that something must 
 be done to make the subscription of Baltimore immediately 
 available at the par value of the six per cent city stock. 
 Therefore it was determined to offer to contractors for their 
 work and to the owners of land in payment for the right of 
 way, certificates, payable when presented in sums of $100, in 
 Baltimore City six per cent stock at par. That entire con- 
 fidence might be felt in these certificates the requisite 
 amount of city stock was to be received by the company 
 simultaneously with each issue of certificates, and be imme- 
 diately vested in two commissioners in trust for the holders 
 of the certificates. These certificates did not promise to 
 pay money, nor were they promissory at all in character. 
 They conferred an absolute authority for the transfer of city 
 stock when presented in the requisite amounts, and when 
 this stock was received, the obligation for which the certifi- 
 cates had been received in satisfaction was finally cancelled. 
 They were therefore not paper money, although they might 
 and did circulate as currency. 
 
 The scheme was at first successful. The contractors and 
 land-owners to whom they were offered accepted them with- 
 out demur. They in turn gave them to their workmen in 
 return for labor. Here they were again accepted and so 
 passed on into general circulation and floated the city stocks 
 for a while at par. By September, 1840, the payments made 
 through this medium amounted to $515,000. The number 
 of certificates issued and their denominations were as fol- 
 lows: 100 of $100 each, 6,800 of $5 each, 13,000 of $3 each, 
 39,000 of $2 each and 354,000 of $1 each. By the autumn 
 of 1840 only the 100 certificates for $100 each had been 
 redeemed in city stock. The saving of interest to the city 
 
48 The Economic History of the [322 
 
 due to the amount of the certificates kept in circulation was 
 considerable. In addition to the amount paid by certificates, 
 the payments by the direct delivery of the city stock 
 amounted by September 30, 1840, to $138,877.47. The cer- 
 tificates, being fundable in city stock at par not worth that 
 sum in the market, soon depreciated in value and much 
 injury was done to the workmen holding these certificates, 
 who were compelled to receive them at par in pa3Tnent for 
 their labor.^ A potent factor in depreciating these certifi- 
 cates was a resolution passed by the City Council of Balti- 
 more in 1842 (Resolution No. 52) repealing the ordinances 
 of February, 1841, allowing the certificates to be received 
 in payment of taxes and city dues. 
 
 By this means the extension of the railroad was con- 
 tinued during a time when many other works of internal 
 improvement throughout the country were partially or 
 wholly suspended. The credit of the state also was pre- 
 served from probable impairment, for the Virginia sub- 
 scriptions, afterwards repealed, were not available, and be- 
 fore the certificate scheme had been conceived the six per 
 cent city stock had not been regarded as negotiable. There- 
 fore the $3,000,000 subscription of the state of Maryland had 
 been looked to as the means whereby the construction of the 
 railroad was to be carried on. This subscription of $3,000,- „ - 
 000 by the state had originally been payable to the company 
 in cash to be raised by the sale of state currency bonds bear- 
 ing interest at six per cent. These bonds were to be offered 
 for sale first in Europe before being put upon any other 
 market. When the attempt was made to put these bonds 
 upon the European market the state's commissioner in 
 Europe ■ reported that it was impracticable to do so, and 
 wrote that sterling, instead of currency bonds, might prove 
 more salable. The legislature of Maryland therefore changed 
 the bonds to sterling bonds, bearing interest at five per 
 cent and payable, principal and interest, in London. In 
 order to provide for the interest for three years, an amount 
 
 ' See contemporary Baltimore newspapers and broadsides. 
 
323] Baltimore and Ohio Railroad, 1827-1853. 49 
 
 of bonds equal to $3,200,000 was issued and delivered 
 directly to the railroad company in full payment of the state's 
 subscription, the company giving the requisite guarantee for 
 the payment of interest. 
 
 Inquiries having revealed the fact that these bonds could 
 not advantageously be disposed of either in New York or 
 Philadelphia, President McLane went to London to en- 
 deavor to place the bonds on the European market as profit- 
 ably as possible. But by the time the bonds could be 
 prepared and forwarded to London an unfavorable change 
 had taken place in the European market so far as American 
 securities were concerned. Such securities had accumu- 
 lated in unprecedented quantities and a general depression 
 in their value had taken place. Many causes had combined 
 to weaken confidence in American credit, one of the most 
 important, of course, being the repudiation of their debts 
 by a number of American states and the suspension of inter- 
 est payments upon their public debts by others — the state of 
 Maryland being in the latter class. The knowledge that 
 there would be forced sales of bonds like those of the state 
 of Maryland at extremely low rates, rendered the sale of 
 those belonging to the company absolutely impossible, 
 except at rates ruinous to the interests of the company and 
 extremely injurious to the credit of the state. For these' 
 reasons President McLane would not put the bonds upon 
 the market. Instead, an arrangement was made wath the 
 house of Baring Brothers & Company of London by which 
 that house agreed to advance such sums as loans to the 
 company as it might require, for which the state bonds were 
 deposited as security. The bonds were to be put upon the 
 market, from time to time, in both Europe and America, in 
 such amounts as the market might seem able to bear, upon 
 terms favorable to the credit of the state and the interests 
 of the railroad company. The necessity for such a loan 
 was obviated, however, for the time by the issue of the 
 stock-orders by the railroad, as already detailed. In Janu- 
 ary and February, 1840, state of Maryland bonds were 
 sold by Baring Bros. & Co. at 85, the proceeds netting 
 
50 The Economic History of the [324 
 
 $21,583.68 in Baltimore. This amount was applied by the 
 railroad company to the payment of interest which had 
 accrued, July i, 1840, upon those bonds that had previously 
 been sold in small lots. 
 
 During the summer and fall of 1839 a corps of engineers 
 was engaged in surveying and laying out the line of the rail- 
 road from Harper's Ferry to Cumberland, so as to have it 
 ready for the contractors to begin their operations in the 
 spring of 1840. Another company of engineers began to 
 survey a route for the railroad about the same time from 
 Wheeling towards Cumberland, but the difficulties con- 
 nected with making available the subscriptions to the rail- 
 road caused the abandonment of this part of the enterprise 
 for the time. Nevertheless, although it was necessary for 
 the railroad company to spend money continually in malting 
 extensive repairs, as well as to purchase and put upon the 
 road new locomotives and cars, and although there were 
 great financial difficulties, the work of extending the rail- 
 road from Harper's Ferry to Cumberland went steadily on 
 after the spring of 1840. 
 
 Dividends of 2 and 3J4 per cent were declared in the fall 
 of 1840 and 1841 respectively, but no dividend was declared 
 in the fall of 1842, owing to the fact that all available means 
 were being employed in completing the railroad to Cumber- 
 land, as well as because the city of Baltimore was unable to 
 continue payments of instalments on its subscriptions. 
 Over $2,465,000 had already been expended in continuing 
 the railroad from Harper's Ferry, and this would practically 
 have been lost had the railroad not been extended to Cum- 
 berland, or at least to Hancock, some fifty miles below 
 Cumberland. At this crisis, therefore, the whole revenue of 
 the railroad was applied in aid of the city subscription, after 
 having deducted from this revenue the amounts needed for 
 operating expenses, repair of the old road, etc., etc. 
 
 With the funds thus obtained the railroad was completed 
 to a point opposite Hancock, 123 miles from Baltimore, on 
 June I, 1842, and five months later it was opened to Cum- 
 berland, 178 miles from Baltimore. 
 
325] Baltinwre and Ohio Railroad, 1827-1853. 51 
 
 CHAPTER IV. 
 
 Embarrassment and Delay. 
 
 (1842-1848.) 
 
 It was not until the spring of 1849 that the actual exten- 
 sion of the railroad west of Cumberland was begun. The 
 obstacles and embarrassments that caused this delay were 
 many. 
 
 (i) By the laws of Maryland, Virginia and Pennsylvania, 
 the railroad company had no authority without additional 
 legislation to occupy any more territory for the construction 
 of the road in any one of these states after 1843. Tli^ addi- 
 tional legislation desired was not obtained until after the 
 expenditure of much time and trouble. 
 
 (2) The company lacked the money necessary to finish 
 the railroad as planned, nor was the credit of the company 
 good enough to raise the large sums needed. 
 
 (3) Such money as the railroad company did possess was 
 urgently needed for the reconstruction of the road between 
 Baltimore and Harper's Ferry and for new rolling stock. 
 
 These three classes of difficulties which prevented the 
 extension of the road will be considered more in detail. 
 
 Delays in Legislation. 
 
 The charters of the railroad as granted by the states of 
 Maryland and Virginia in 1827 provided that the road must 
 be finished within these states within ten years from the 
 time of the commencement of the railroad, otherwise the 
 charters would be null and void. A similar provision was 
 inserted in the act passed by Pennsylvania in February, 1828, 
 authorizing the construction of a railroad by the Baltimore 
 and Ohio Railroad Company through that state, except that 
 " fifteen years " took the place of the words "ten years" in 
 
52 The Economic History of the [326 
 
 the Maryland and Virginia acts. On March 28, 1836,^ an 
 act was passed in the Maryland General Assembly extend- 
 ing the time for the completion of the railroad in Maryland 
 to July 4, 1843. Such an act was necessary, for the road 
 was then built only as far as a point opposite Harper's 
 Ferry. 
 
 Even at that time the legislature of Virginia was dilatory 
 in its action as regarded the railroad, and although the right 
 to build in Virginia expired July 4, 1838, and the company, 
 anxious to push the construction of the road on towards 
 Cumberland, was doing everything in its power to secure 
 the passage of a favorable bill in the Virginia legislature, it 
 was not until April 2, 1838, that a law was passed extending 
 the time allowed " for the completion of that portion of their 
 improvement to be constructed within this commonwealth " 
 to July 4, 1843. The other provisions of this act, upon the 
 acceptance of which depended the extension of time, have 
 already been treated. 
 
 But by November, 1842, the railroad had been constructed 
 and opened only as far as Cumberland, a distance of but 
 178 miles. There were still two hundred miles of railroad 
 to be built in order to unite Baltimore with " the waters of 
 the West." A few months more and the company would 
 have no rights of further extension in Maryland, Virginia or 
 Pennsylvania, and by the terms of the charters conferred by 
 these respective states the charters themselves were null and 
 void if the railroad had not been completed within these 
 states within the time specified. 
 
 For this last reason, even if it was impracticable to con- 
 tinue immediately the construction westward, it was neces- 
 sary to secure a further extension of time in Maryland and 
 in Virginia or Pennsylvania. A grant of such extension 
 was obtained without difficulty from the Maryland legisla- 
 ture in 1843" in an act of much importance, since it not 
 only extended the time for the completion of the railroad 
 
 ' Acts of 183s, ch. 245. ' Maryland Laws, 1842, ch. 301. 
 
327] Baltimore and Ohio Radlroad, 1827-1853. 53 
 
 in Maryland until July 5, 1863, but also provided for the sale 
 of the state's interest in internal improvement companies and 
 the payment of the state debts. But in spite of continued 
 applications to the legislatures of Virginia and Pennsyl- 
 vania, no acts at all acceptable to the company were forth- 
 coming. 
 
 The Virginia legislature passed various acts granting the 
 desired extension of time, but these laws contained so many 
 vexatious restrictions regarding rates, taxation, routes, etc., 
 that they were all rejected by the Baltimore and Ohio stock- 
 holders. 
 
 Finally, after a long and tedious period of application and 
 petitioning, the Virginia legislature granted an act authoriz- 
 ing the extension of the railroad through Virginia on terms 
 acceptable to the company. The act was passed March 6, 
 1847,' ^^'-^ accepted at a general meeting of the stockhold- 
 ers. This new law provided that the road was to be con- 
 structed to Wheeling according to the plans and route sub- 
 mitted by the chief engineer at a meeting of the stockholders 
 held in Baltimore, July 12, 1845, '^^^ certain restrictions, 
 however, that in order to secure to the city of Wheeling the 
 benefit of the western terminus of the railroad, all parts 
 thereof between the Monongahela river and Wheeling were 
 to be opened for the transportation of passengers and freight 
 simultaneously. The act also annulled the stock subscrip- 
 tions on the part of the state of Virginia made by acts passed 
 March 28, 1837, and April 2, 1838, which had provided for 
 subscriptions of $302,100 and of $1,058,420 respectively. 
 Provisions were also inserted reserving the right to connect 
 with or intersect the railroad by other lines of transporta- 
 tion; obliging the company to erect certain depots, subject- 
 ing the company to the general railroad law of Virginia;^ 
 reserving the right of Virginia to tax the property, stock 
 and profits of the company so far as these might be or 
 
 ' Acts of Virginia Legislature, session 1846, ch. 99. 
 '■'Acts of Virginia Legislature, session 1837, ch. 118. 
 
54 The Economic History of the [328 
 
 accrue in the commonwealth of Virginia on the same foot- 
 ing with other similar companies within the state; provided, 
 however, that this taxing power was not to be exercised 
 until and unless the net income of the railway company- 
 was over six per cent per annum upon the capital invested. 
 The city of Wheeling was authorized to subscribe $1,000,000 
 to the capital stock of the railroad company upon such terms 
 as might be agreed upon between the City Council of Wheel- 
 ing and the company; and, again, that as a condition upon 
 which the whole act was granted, the company was to 
 " accept this act within six months and enter upon the con- 
 struction of the continuation of their road hereinbefore 
 authorized within three years, and complete the same within 
 twelve years, after the passage of this act," i. e. by March 6, 
 
 1859- 
 
 So far as Maryland and Virginia were concerned, there 
 were no further legal obstacles to the continuation of the 
 railroad to the West. The charter had expired in Pennsyl- 
 vania in 1843, and the act passed by the legislature of Penn- 
 sylvania, June 20, 1839, extending the time for the comple- 
 tion of the railroad in that state until February 27, 1847, was 
 not accepted by the company, owing to the new and onerous 
 conditions imposed by the act, especially those prescribing 
 the route to be taken. 
 
 Financial DiMculties. 
 
 The years that were spent by the company in waiting for 
 acceptable terms upon which to continue the extension of 
 their railroad westward were not years wasted. At the time 
 of the completion of the railroad to Cumberland the finances 
 of the company were not in a condition to permit of new 
 construction to any great extent or the expenditure of any 
 large sums for such purposes. The money markets had not 
 recovered in 1842 from the crisis and panic of 1837. As 
 it was, the extension of the road to Cumberland from Harp- 
 er's Ferry had only been made with much difficulty and 
 
329] Baltimore and Ohio Railroad, 1827-1853. 55 
 
 skillful financiering. Although the railroad company had 
 been able to realize from the $3,000,000 subscription of the 
 city of Baltimore,^ yet the credit of the state of Maryland 
 was so low that its bonds had been a failure on the London 
 market, and but £5,250 worth had been sold at 85. This 
 sum had not been used in construction at all, but to pay 
 interest on existing debts. The revenues of the railroad 
 company and a loan by Baring Bros., with the state bonds 
 as security, had together realized barely enough to enable 
 the completion of the railroad to Cumberland. 
 
 The period between November, 1842, and the spring of 
 1849 — ^when the active construction of the road toward 
 Wheeling was finally begun — was spent in reconstructing 
 those portions of the road east of Cumberland which were 
 in need of improvement, in providing adequate rolling stock 
 and preparing to make the financial arrangements requisite 
 to ensure the completion of the road as soon as the neces- 
 sary legislation regarding the right of way had been secured. 
 It was evident to the directors at this time that the money 
 necessary to completion could not be then obtained. The 
 greater portion of the state bonds in payment of the $3,000,- 
 000 subscription still remained in the hands of the company, 
 and indeed bade fair to so remain for an indefinite period. 
 
 In 1844 President McLane went to Europe for the second 
 time in the interests of his company, to try to secure financial 
 aid in the London market. He returned in October, 1846, 
 without having accomplished his object, but his examina- 
 tion of the workings of the English railroads resulted in his 
 submitting to the board of directors an improved method of 
 organizing the operations of the road. The plan was 
 adopted in 1847 ^^'^t with but a temporary suspension 
 during the administration of President Swann (1848-1853), 
 remained the permanent organization of the road for many 
 years.^ 
 
 ' Session of 1836, Resolution No. 40. Approved March 17, 1836. 
 ' The principal objects of the reform were to insure a proper 
 adaptation and application of the supervisory power in each depart- 
 
56 The Economic History of the [330 
 
 Almost immediately after the opening of the road to 
 Cumberland it became necessary to reduce rates, owing to 
 the fact that the Pennsylvania lines had met the prospective 
 competition of the Baltimore and Ohio by lowering their 
 rates considerably below those of their Maryland rival. 
 Consequently charges for passengers on the Baltimore and 
 Ohio were reduced about 25 per cent, and for freight about 
 30 per cent below the rates of the previous year. President 
 McLane in his report^ naively remarks that the Pennsyl- 
 vania lines have established " rates which it is believed are 
 not required by the public nor justified by the true interests 
 of the works." Another disappointment to those interested 
 in the Baltimore and Ohio was the fact that the wagon trans- 
 
 ment to the object under its immediate charge by means of a judici- 
 ous division of labor; to eflfect a strict responsibility in the collection 
 and disbursements of money, and in the accounting department 
 generally by the multiplication of checks; to confine the company's 
 mechanical operations in the shops to the purposes of repairs rather 
 than of construction; and to promote the economical purchase and 
 application of materials and the objects needed in every class of 
 service. It was believed that all these ends could be best reached 
 by confiding the departments of transportation, of the reconstruc- 
 tion and repairs of the road and of the repairs of machinery to 
 separate superintendents of " Transportation," of " Road " and of 
 " Machinery " respectively. Each of these departments was to be 
 subject to the immediate supervision of a professional engineer 
 under the general direction of the president of the road. All of 
 these ofificers and all of the principal agents of the road were to be 
 subject to annual appointment, and satisfactory security was to be 
 required from each for faithful performance of duty. 
 
 Measures were also taken that the receipt of money be confined 
 to as few agents as possible; for prompt payment from all of 
 moneys received by them; for a new and securely guarded system 
 of tickets to supersede the old, loose method by which counter- 
 feiting was invited; for the imposition of further checks upon con- 
 ductors and other agents, which were thought would prove more 
 effective in enforcing a rigid accountability from all. A daily 
 account was required of all agents with the secretary and treasurer 
 of the railroad under the immediate supervision of the president in 
 the central office of the company. It was evident too that the ex- 
 pense of the new system would be less, and that the efficiency 
 would be much greater, than under the older and laxer system of 
 general superintendents. 
 
 ' Seventeenth Annual Report, p. 4. 
 
331] Baltimore and Ohio Railroad, 1827-1853. 57 
 
 portation over the National Road from the West failed to 
 supply the anticipated traiific at Cumberland. This draw- 
 back was not fully obviated until the extension of the road 
 to Wheeling in 1853. Still the completion of the railroad 
 to such an important point as Cumberland showed imme- 
 diate results in the augmentation of trafific, bearing out the 
 claims of the presidents and directors that the more nearly 
 the road was completed the larger, proportionally, would 
 the net receipts become. Thus, for example, the receipts 
 from passengers, mails and freight, the expenses for the 
 same, and the net receipts for the four years 1841-44 — the 
 two years before and the two years after the road was fin- 
 ished to Cumberland — were as follows: 
 
 
 Beoeifts. 
 
 
 Expenses. 
 
 
 rears. 
 
 PassengerB 
 
 Freight. 
 
 Total 
 
 
 Net 
 
 
 and Mails. 
 
 
 Receipts. 
 
 
 Beoeipts. 
 
 1841 
 
 $179,616 
 
 $211,454 
 
 $391,070 
 
 $239,622 
 
 $151,448 
 
 1842 
 
 181,177 
 
 245,315 
 
 426,492 
 
 216,71s 
 
 209,777 
 
 1843 
 
 274,617 
 
 300,618 
 
 575,235 
 
 295,833 
 
 279,402 
 
 1844 
 
 336,876 
 
 321,743 
 
 658,619 
 
 311,633 
 
 346,986 
 
 '"'Ff JJ",t,/v, j^x,/nj v,ou,-Jiy J'i,"00 Of",:*"" 
 
 The receipts from freight increased very rapidly after 
 1845. 
 
 Some such statement of the principles governing the eam- 
 irigs of but partially completed railroads was necessary to 
 satisfy the demands of individuals who had their capital in- 
 vested in Baltimore and Ohio stock, and who had seen very 
 little return therefor, as well as to keep all alive to the abso- 
 lute necessity of completion of the road to Wheeling, in 
 order to realize the long hoped-for benefits that were ex- 
 pected to accrue from the great railroad. Although it was 
 only too evident that the railway tracks and roadway gen- 
 erally east of Harper's Ferry were in need of thorough 
 repairs, and in places even of reconstruction, and that money 
 was needed for new rolling stock to satisfy the demands 
 made for the transportation of goods from the region around 
 and to the west of Cumberland, yet it was deemed expedi- 
 ent in the fall of 1843 to declare a dividend of 2 per cent 
 
58 The Economic History of the [332 
 
 upon the stock of the main line of the railroad. The divi- 
 dend amounted to $140,000, or 2 per cent on $7,000,000. 
 This amount of capital, however, was not all that upon which 
 the dividend ought to have been declared, for surplus net 
 revenue had been reinvested, i. e. used as capital, from 1830 
 onward, and by the fall of 1843 this sum amounted to $873,- 
 806. 
 
 In the president's report' in which the above facts were 
 announced, and indeed in all the reports from this time on 
 and up to 1852, stress is laid upon the necessity of the com- 
 pletion of the work as orginially contemplated, the point 
 being made that not only would the capital invested in an 
 uncompleted line of railroad pay no dividends, but that the 
 commerce and prosperity of Baltimore would be irretriev- 
 ably injured by lack of communication with the West. 
 
 Need of Reconstruction and New Equipment: 
 
 The history of the railroad during this period is a story — 
 so far as the practical workings and internal policy are con- 
 cerned — of a struggle to survive and to remedy the serious 
 mistakes made in the earlier years of the company's exist- 
 ence. The errors which cost the company so dear in the 
 forties were mainly mistaken economies in construction and 
 inadequate calculations as to the cost of a great and perma- 
 nent railroad through an unfavorable territory. Ignorance 
 in regard to railroad construction was at that time practic- 
 ally universal in America, and there was no school save that 
 of experience in which the directors of the early railways 
 could learn. In so far the early errors of the Baltimore and 
 Ohio Railroad Company were unavoidable, but the experi- 
 ence was dearly bought. 
 
 Early in 1846 it became absolutely necessary to recon- 
 struct entirely the line of road from Baltimore to Harper's 
 Ferry, a distance of 81 miles, for the road as originally 
 built was entirely inadequate for the heavy trafiRc for which 
 
 ' Seventeenth Annual Report (1843). 
 
333] Baltimore and OUo Railroad, 1827-1853, 59 
 
 it was being used. It was necessary, too, that the new 
 " edge " rail be laid in place of the already • antiquated 
 " plate " rail. In January, 1846, the board of directors pro- 
 vided that thirty miles of road be immediately equipped with 
 the new rails. The cost of this reconstruction was esti- 
 mated at $316,800. The company had not the necessary 
 funds at hand to pay for this except by taking the revenues 
 of the road. It was possible to sell mortgage bonds on 
 the open market only at a discount of at least ten per cent. 
 Reasons for this were the low credit of the company, owing 
 to its small dividends (never yet above 3 per cent), the 
 absence of limit to the amount of bonds the company might 
 issue and of proper provision for repayment. It was there- 
 fore resolved by the directors that the interests of the com- 
 pany and of the stockholders could be best served by apply- 
 ing net revenue to the amount of $1,000,000 to the further 
 reconstruction of the railroad, and by issuing dividends to 
 the stockholders up to the same amount, partly in the com- 
 pany's 6 per cent (second mortgage) bonds at par and partly 
 in cash. The 3 per cent dividend declared September 30, 
 1846, was provided for as follows: "To all stockholders 
 owning on the first day of October, 1846, less than 50 shares 
 of stock, three dollars in money on each share on and after 
 November 20, 1846; and to all similar stockholders owning 
 50 shares and over, one dollar on each share in money and 
 two dollars in the bonds of the company, bearing 6 per cent 
 interest, payable quarterly and reimbursable in twenty 
 years." It was hoped that by these means the value of the 
 company's bonds would be raised. 
 
 It was announced in the report of the president of the 
 road for 1846 that owing to' the state of the road necessitat- 
 ing not only reconstruction, but also a large future outlay 
 on engines and cars (needed not only to replace those worn 
 out, but also to purchase additional ones to accommodate 
 the increasing traffic), no dividends were to be expected at 
 the end of 1847, ^^^ that for the same reason " the dividend 
 for the year ending September 30, 1848, will also be materi- 
 
60 The Economic History of the [334 
 
 ally diminished." No further cash dividend was declared 
 until May, 1856 — a dividend of 3 per cent in bonds of the 
 company being declared in 1847, and yearly dividends in 
 additional stock of the company, i. e. " scrip," from 1848 to 
 1853 inclusive. 
 
 The work of reconstruction of the road was continued 
 through 1847. Nearly $50,000 of the company's 6 per cent 
 second mortgage bonds had been sold at about par, and the 
 city of Baltimore "had agreed to take $105,000 of the same 
 securities at par as dividend. As regarded payments for 
 the thirty miles of reconstruction authorized the previous 
 year, the company had arranged to make part payment in the 
 company's notes at long credit and part in the above-men- 
 tioned 6 per cent bonds at par. Furthermore, contracts had 
 been made to the amount of $152,872 for alterations and 
 improvements in the old track, and these contracts were to 
 be payable also in the 6 per cent bonds at par. And finally, 
 yet more of these 6 per cent bonds were used at par to pay 
 the dividend of 3 per cent which was declared September 30, 
 
 1847. 
 
 The year 1848 was well spent in perfecting the workings 
 of the railroad, in fostering economies by improvements in 
 organization, construction and equipment, and in general 
 preparation for the early extension of the road westward 
 by careful reconnoissances and surveys of the region between 
 Cumberland and Wheeling over the routes already fairly 
 well known to the engineers. The next year witnessed the 
 beginning of a period of renewed life, which did not end 
 until the railroad had reached its western terminus at Wheel- 
 ing. 
 
 When, in 1848, the company initiated its system of apply- 
 ing net revenue as capital in reconstructing and imprbve- 
 ment and issuing stock dividends in lieu of money, it used 
 part of this new capital in the purchase of ten first-class 
 engines, two second-class engines, a third-class engine, 28 
 passenger cars and 171 freight cars. A branch of the rail- 
 road was extended to the south side of the harbor in Balti- 
 
335] Baltimore and Ohio Railroad, 1827-1853. 61 
 
 more, where grounds were purchased at Locust Point. 
 This was done so that freight not intended for distribution 
 in the city might be carried by steam to the water's edge, and 
 the expense and inconvenience of using horse-power through 
 the streets of Baltimore avoided. Some $200,000 were also 
 spent in general repairs of the road east of Harper's Ferry, 
 and in straightening and changing the defective location of 
 the track east of the Monocacy river, so that there might 
 be no curve of less than 600 feet radius. 
 
62 The Economic History of the [336 
 
 CHAPTER V. 
 
 Completion. Cumberland to Wheeling. 
 
 (1848-1853.) 
 
 The administration of Thomas Swann, third president of 
 the Baltimore and Ohio Railroad Company, covers the com- 
 pletion of the main stem, at that time the longest railroad 
 in America. The construction in four years (1849-1852) of 
 two hundred miles of railroad through the mountainous 
 region of the Alleghanies, over ravines and rivers, through 
 tunnels drilled in the rocky mountain-side, up steep ascents 
 and around perilous curves, and above all, in face of a lack 
 of the funds necessary to carry out fully the matured plans 
 of the project, was an achievement only to be accomplished 
 by a man of indefatigable energy, courage and indomitable 
 will — a man at once a financier, an administrator and one 
 possessing rare executive ability. 
 
 When Thomas Swann was elected president of the com- 
 pany shortly after McLane's resignation in 1848, his views 
 on the expediency and necessity of speedy completion of 
 the railroad to Wheeling were well known. He had already 
 served the company as director and member of special com- 
 mittees appointed to secure favorable legislation for the rail- 
 road from the General Assembly of Virginia. 
 
 At a meeting of the board of directors held early in 1849, 
 President Swann emphasized the fact that the friends of the 
 railroad were becoming disheartened and many of the stock- 
 holders and the public generally were growing suspicious 
 and unfriendly to the project, owing to the delays in its com- 
 pletion and inadequate returns upon their investments. The 
 subscriptions of the state and city had caused an increase in 
 taxation without any corresponding compensation. To put 
 the railroad upon a paying basis, to ensure to Baltimore the 
 
337] Baltimore and Ohio Railroad, 1827-1853. 63 
 
 commerce to which by virtue of geographical situation and 
 natural advantages she was entitled, and finally to revive 
 some of the old enthusiasm in the friends of the company, 
 President Swann urged that active measures be at once taken 
 to complete the railroad not only to Fairmont on the Monon- 
 gahela river (as proposed by some of the directors), but to 
 Wheeling on the Ohio river, as had been the original in- 
 tention of the organizers of the company. President Swann 
 did not overlook the difficulties, financial and topographical, 
 which opposed the successful completion of this plan, but 
 showed that the sacrifices already made in building the line 
 of road then finished were much greater than those still to 
 be made. His address is said to have had such an efifect 
 upon his hearers that George Brown, one of the directors 
 and with Philip E. Thomas, co-founder of the company, is 
 reported to have risen in excitement and moved "that the 
 chief engineer be directed to arrange to put the whole line 
 to the Ohio river under contract as speedily as practicable." 
 The resolution was adopted with enthusiastic unanimity. 
 
 Reconnoissance of the country lying between Cumber- 
 land and Wheeling had been made as early as 1836 under 
 direction of Benjamin H. Latrobe, and in his report he esti- 
 mated the cost of building a railroad from Harper's Ferry 
 to Wheeling, through Pittsburgh, at $9,500,000. In 1843 
 preliminary reconnoissances were made in the state of Vir- 
 ginia of the region lying between Cumberland and Wheel- 
 ing. In July, 1847, Latrobe directed the operations of three 
 corps of engineers engaged in the location of the proposed 
 line of railway from Cumberland westward to the Maryland- 
 Virginia boundary line. The party of engineers having the 
 westernmost section in hand — ^but fifteen miles — on the com- 
 pletion thereof passed into Virginia, and by the close of the 
 season some sixty miles of the route westward fromi Cumber- 
 land were ready for contract. In the summer and fall of 
 1848, Engineer Latrobe, induced by the difficulties of a suit- 
 able route over the mountains and across the valleys of the 
 Cheat River and Tygart's Valley River regions, secured the 
 
64 The Economic History of tlie [338 
 
 services of two other expert engineers, who examined the 
 entire region with care. Tne three engineers finally decided 
 upon the routes that it would be best to follow, and reported 
 also that in their opinion the construction of a railroad across 
 this mountainous country was quite practicable with grades 
 within the power of the locomotive. 
 
 All conditions at this time would have been favorable for 
 the active extension of the road westward but for the lack 
 of money. According to the estimate submitted by the 
 general superintendent in October, 1849, the cost of the road 
 from Cumberland to Wheeling was estimated at $6,278,000. 
 
 President Swann in his report for 1850 made the following 
 exhibit of how much of this amount was to be raised, and 
 how much of it the company then had or had already 
 expended : 
 
 (i) Money expended for all purposes in the extension 
 of the road west of Cumberland (Sept. 30, 1850), 
 exclusive of bonds given for iron rails and inter- f 
 est $ 934,71356 
 
 (2) Balance of cash from sale of £200,000 5 per cent 
 
 bonds 476,650.00 
 
 (3) Value of 5 per cent sterling bonds unsold (£507,- 
 
 Soo) 2,172,908.06' 
 
 (4) Bonds issued for iron rails Qan. i, 1850) at 6 per 
 
 cent, for £127,500 secured by mortgage. Baring 
 
 Brothers 566,666.67 
 
 (5) Revenue during progress of work, estimated at... 500,000.00 
 
 (6) Subscription of city of Wheeling 500,000.00 
 
 $5,150,938.29 
 
 (7) Deficiency to be made up to enable the whole road 
 
 to be placed under contract. Proposed to be 
 raised by 6 per cent coupon bonds of the com- 
 pany 1,128,731.00 
 
 $6,279,669.29 
 Estimated cost of the road (Cumberland to Wheeling) 
 
 as per report of the general superintendent, Oct. 
 
 29, 1849 $6,278,000.00 
 
 [Actual cost $6,631,721.00] 
 
 ' The actual yield of these bonds was only $1,973,688.89, on account 
 of their having been sold at a limit of 91 on January 3, 1851. Cf. 
 Report of President for 185 1, p. 8. 
 
339] Baltimore and Ohio Railroad, 1827-1853. 65 
 
 Taking into account the previous financial history of the 
 railroad, the statement made a fairly satisfactory showing. 
 Still it was not at all certain that the arrangements there 
 shown could be actually carried out. Two of the items had 
 already been financiered through by President Swann. The 
 first deal was in regard to the Maryland state bonds issued 
 in payment of the state's $3,000,000 subscription to the Bal- 
 timore and Ohio, and up to this time practically unsalable. 
 These bonds were lying intact — ^with the exception of £5,000 
 sold in small lots — in the vaults of Baring Bros, of London 
 as security for advances that that firm had made to the 
 railroad company, and as a matter of policy, in that the oppor- 
 tunity for selling them' would be better in London hands 
 than in American. President Swann turned to these bonds 
 as a means of raising revenue. They could be sold only if 
 the credit of the state and of the railroad company^ were 
 raised by the active support of some such powerful London 
 banking house as Baring Brothers. This support was 
 secured after a long correspondence, and the London firm 
 bought i200,ooo of the 5 per cent sterling bonds of the state 
 at a rate equal to that prevailing in the home market for the 
 limited amount of these bonds offered for sale. It was 
 hoped that the effect of this sale would be twofold — a reduc- 
 tion in the estimates of the probable cost of the road, owing 
 to the confidence inspired by a full treasury; and a higher 
 market rate for the remaining sterling bonds, due to the 
 purchase made by such a conservative and powerful finan-W 
 cial house as Baring Brothers. Both results did follow for 
 a time, but other difficulties soon more than offset the 
 advantages thus derived.'' 
 
 ' Shares of Baltimore and Ohio stock were sold in Baltimore in 
 October, 1848, at 28. 
 
 " These bonds had been sold in limited amounts below par, but in 
 his report for 1850 (p. 15) President Swann says that these bonds 
 with the endorsement of Baring Bros, had sold in the London 
 market during 1850 at from 105 to 108. The absolute necessity for 
 money to finish the road led to a forced sale of the remaining bonds 
 to a New York firm in January, 1851, at 91, realizing $1,973,688.89. 
 
66 The Economic History of the [340 
 
 The second deal had for its object the raising of $566,- 
 666.67 for the purchase of iron rail^and was also consum- 
 mated through Baring Brothers, xhe railroad company 
 issued £127,500 of 6 per cent mortgage bonds to Baring 
 Brothers, payable in equal instalments in January, 1856, 
 1857, 1858, 1859 and i860, and received in return some 
 20,000 tons of iron rails from Thompson & Foreman of 
 London. These bonds were known as the " Iron Bonds." 
 
 The deficiency of $1,128,731, the sum needed to construct 
 the railroad according to the estimate of October, 1849, was 
 made up by the issuance to President Swann of 6 per cent 
 mortgage bonds to the amount needed. The bonds were 
 dated July 10, 1850, and were payable July i, 1875. It was 
 deemed inadvisable to put these bonds immediately upon 
 the market, and they were not sold until 1852, when an 
 unexpected crisis confronted the directors. The expenses 
 of construction were then very large, the monthly average 
 during the previous fiscal year having been $200,000. Five 
 thousand laborers and over a thousand horses were then 
 being employed by the company in the construction of new 
 road. The treasury was growing alarmingly weak and it 
 was found that the coupon bonds could not be floated at 
 anything like par. The railroad must be completed at the 
 earliest possible moment. Repeated efforts were therefore 
 made to sell the bonds at a figure favorable to both the 
 credit and the interests of the company, but were for a long 
 time fruitless. The bonds were finally sold at a limit of 80, 
 the directors feeling that it was better to make this com- 
 paratively small sacrifice for the time being rather than to 
 endanger the existence of large and varied interests by in- 
 definite delay in the completion of the work. 
 
 Legislation regarding the railroad during the period from 
 1849 to 1853 was comparatively unimportant, except for an 
 act passed March 21, 1850, by the legislature of Virginia. 
 The reasons for the passage of this act were as follows : By 
 the law passed by the Virginia legislature, March 6, 1847 
 (Ch. 99, Acts of 1846-7), it had been provided that extension 
 
341] Baltimore and Ohio Railroad, 1827-1853. 67 
 
 of time for completion through Virginia depended among 
 other things upon the railroad being made to enter the 
 ravine of the Ohio river not south of the mouth of Fish 
 Creek in Marshall County, with the further provision " that 
 if the said railroad by the cheapest route to the city of 
 Wheeling, which shall not enter the ravine of the Ohio river 
 at any point south of Grave Creek in Marshall County, shall 
 appear from the estimates to be made as aforesaid to be 
 more costly to construct, maintain and work than it would 
 be by the route passing into the ravine of the Ohio river at 
 or near the mouth of Fish Creek and thence to the city of 
 Wheeling; and if, when the difference of probable cost be- 
 tween said two routes shall be ascertained as aforesaid, the 
 city of Wheeling shall agree to pay to said railroad such 
 difiference of cost by the time said railroad shall be com- 
 pleted and opened for transportation to said depot in 
 Wheeling (which payment it shall be lawful for the said city 
 of Wheeling to provide for and make), then the said railroad 
 company are hereby required to locate and construct their 
 said railroad so that in passing to said depot in Wheeling 
 it shall not enter the ravine of the Ohio river at any point 
 south of Grave Creek." 
 
 Since the time of the completion of the Baltimore and 
 Ohio to Cumberland it had been the desire of the company 
 to build its road in as straight and southerly a line to the 
 Ohio as possible, in order to connect with Cincinnati and 
 St. Louis over the shortest Une of road, and it was not at 
 all desirous of making Wheeling the terminus of the main 
 stem. The people of Wheeling, on the other hand, fearing 
 with much reason that the more southerly the line of the 
 Baltimore and Ohio the greater danger of their commerce 
 and industry being unfavorably affected, owing to the short 
 and direct connection of Baltimore and the Atlantic sea- 
 board with Cincinnati and St. Louis, had made every effort 
 to make the railroad take the most northerly route to their 
 city. The citizens of Wheeling therefore decided upon the 
 Grave Creek or more northerly route; the directors of the 
 
68 The Economic History of the [342 
 
 Baltimore and Ohio, looking to what they considered their 
 own best interests, decided upon the Fish Creek route. As 
 a matter of course, controversy and dissension followed. As 
 a consequence, the citizens of Wheeling proposed to make 
 an application to the Virginia legislature to stop the progress 
 of the railroad in that state. President Swann went to the 
 legislature and succeeded in counteracting this application, 
 but a law was passed, March 21, 1850, providing for a board 
 of three engineers, " not residents of the states of Maryland, 
 Virginia, Pennsylvania or Ohio, and not interested in or 
 in any manner connected with the said company or the said 
 city," which board was to render a final and binding decision 
 after full investigation of the matter in dispute. From a 
 desire to avoid further delay in the completion of the road, 
 since the above-mentioned board of engineers had made a 
 decision' adverse to the company. President Swann advised 
 the Baltimore and Ohio stockholders, at a general meeting 
 held in May, 1850, to give way to the desires of the people 
 of Wheeling and build along the Grave Creek route. This 
 was accordingly done, and what had bidden fair to be a long 
 and stubbornly contested controversy was thus averted by 
 the conciliatory policy of the railroad. 
 
 The city of Wheeling, by the agreement of 1847 with the 
 railroad company, had stipulated to furnish free of charge, 
 with the right of way through the city streets, a depot on the 
 north side of Wheeling Creek with not less than two acres 
 of ground. By a compromise between the city and the com- 
 pany the agreement of 1847 was abrogated and another 
 made, whereby Wheeling agreed to pay $50,000 of the 
 $78,000 estimated as the cost of the Wheeling depot. The 
 railroad company agreed to do this because the latter sum 
 included in its purchasing power a considerable plot of 
 ground that would not be needed by the railroad and that, 
 it was believed, could be sold for more than the $28,000 
 difference. 
 
 '■ Cf. Report, 1830, p. 13. 
 
343] Baltimore and Ohio Railroad, 1827-1853. 69 
 
 It was felt that for the next few years the railway would 
 have to depend upon the navigation of the Ohio river to 
 a considerable extent as regarded communication with Cin- 
 cinnati, St. Louis and other points beyond the western ter- 
 minus of the road. But a passenger ascending the Ohio 
 river in a steamboat could reach Baltimore in about the 
 same time it would take him to reach Pittsburgh, since 
 Wheeling was a day's journey by boat from Pittsburgh. 
 The importance of a line of boats connecting with the Balti- 
 more and Ohio schedule was clearly seen, and a company 
 was organized in 1852 under a charter passed by the Vir- 
 ginia legislature, whereby a daily line of boats " of a class 
 superior to any yet floated upon the Western waters," was 
 to be ready to run on the Ohio by January i, 1853, in con- 
 nection with the Baltimore and Ohio to Cincinnati and 
 Louisville. 
 
 With afifairs in such a condition as regarded the future, 
 although the company had a large bonded debt and the 
 need of a second track and an ampler equipment soon be- 
 came evident, it was no wonder that the spirits of those who 
 had worked hard in bringing the enterprise to a successful 
 completion were elevated and that they looked with confi- 
 dence and assurance to the years to come. 
 
 While the new road from Cumberland to Wheeling was 
 in process of construction it was the policy of the company 
 to keep the line east of Cumberland in the very best possible 
 condition, having by this time learned that the most expen- 
 sively built railroad is really the cheapest, and that imme- 
 diate and careful attention to minor repairs effects great 
 economies. Simple and evident as this appears, it had by 
 no means always been acted upon. Preparations were also 
 being made to increase the capacity of the road from its 
 limited power in 1848, so as better to meet the traffic which 
 it was confidently felt the completion of the main stem 
 would develop. The means by which this was done were 
 by issuing dividends in the form of additional stock and 
 using the net receipts, which the stock dividends represented, 
 
70 The Economic History of the [344 
 
 as additional capital applied to construction. The following 
 " scrip " or stock dividends were thus declared: 3J^ per cent, 
 payable in November, 1848; 5 per cent, payable in Novem- 
 ber, 1849; 7 per cent, payable in November, 1850; 7 per cent, 
 payable in November, 1851; 7 per cent, payable in Novem- 
 ber, 1852; and 3 per cent, payable in May, 1853. 
 
 During this period of completion of the railroad to Wheel- 
 ing the company made many other provisions for perfecting 
 their road. New engines and cars were ordered, so that in 
 January, 1853, the company had 139 engines, 96 passenger 
 cars and 2567 freight cars. In 1852 the ground was bought 
 upon which Camden Station, the present principal depot of 
 the Baltimore and Ohio in Baltimore, now stands, and prepa- 
 rations were made to erect a suitable building and train-shed. 
 Permission was given to the company by the city to 
 approach the new depot by steam locomotive, thereby obvi- 
 ating the expense of horse-power. The Mt. Clare shops, at 
 which 1,000 men were employed during 1852, had also been 
 much enlarged during this period, and many improvements 
 had been made upon the company's property at Cumberland 
 and Martinsburg. The facilities afforded by the railroad 
 for the cheap transportation of coal to tide-water had led to 
 the opening and development of many mines in and around 
 the Cumberland and Frostburg regions. The large increase 
 in the coal trade led to the need of enlarged facilities for 
 handling coal at Baltimore, and new wharves, fitted com- 
 pletely for transferring thousands of tons of coal to waiting 
 vessels, were erected at Locust Point, not only by the rail- 
 road company, but also on private account. 
 
 The building of the new road westward proceeded rapidly 
 and uninterruptedly in spite of financial and topographical 
 obstacles. In the twenty-third annual report of the Balti- 
 more and Ohio in October, 1849, President Swann was able 
 to announce that 103J4 miles had been put under contract, 
 and those at very advantageous prices. During the next 
 official year ending September 30, 1850, the work was 
 pressed on. The action of the board of engineers appointed 
 
345] Baltimore and Ohio Railroad, 1827-1853. 71 
 
 under the act of March 21, 1850, by the legislature of Vir- 
 ginia had led the stockholders and directors of the company 
 to decide to use the Grave Creek route, and work was 
 accordingly being done upon it. In spite of the fact that 
 there had been a scarcity of labor during the previous year, 
 167 miles of road were announced as under way. Some 
 3,500 laborers and 700 horses were engaged on this work 
 during 1850. The rails were laid during the spring of 185 1, 
 and in July of that year the road was formally opened to 
 Piedmont, twenty-eight miles west of Cumberland. 
 
 Not quite a year after the opening to Piedmont (June 22, 
 1852) the road was opened to Fairmont on the Mononga- 
 hela river, 124 miles from Cumberland and but /''■^ miles 
 from Wheeling. The location of this road through one of 
 the boldest mountain regions which had yet been traversed 
 by any work of internal improvement in America is said to 
 have excited surprise even among professional engineers. 
 For more than seventy miles the road had been built across 
 a succession of mountain ranges. The Monongahela river 
 was crossed by a viaduct 650 feet long and 39 feet above 
 low water, the iron superstructure supported by the massive 
 abutments forming what was then the largest iron bridge 
 in America. Between Cumberland and Wheeling eleven 
 tunnels were bored, making together a total of 11,156 feet 
 in length. The three largest were 4,100 feet, 2,350 feet and 
 1,250 feet in length respectively. Between the same points 
 there were 113 bridges with a total length of 7,003 feet and 
 ranging from 12 to 205 feet span. 
 
 On Christmas Eve, 1852, the last rail was laid and the last 
 spike driven. Baltimore had finally been connected with 
 the " western waters " by bonds of iron. President Swann's 
 hopes and predictions, in the face of innumerable and appar- 
 ently insurmyuntable obstacles, were fulfilled. On the first 
 of January, 1853, the first train to make the complete trip 
 from Baltimore to Wheeling rolled through the streets of 
 that city bearing the first of the five hundred guests who 
 came to participate in the formal celebration of the com- 
 pletion of the Baltimore and Ohio Railroad. 
 
72 The Economic History of the [346 
 
 CHAPTER VI. 
 General Results. 
 
 During the period of construction of the Baltimore and 
 Ohio Railroad from Baltimore to Wheeling the enterprise 
 exercised important influences upon the growth of the 
 wealth and the development of the resources of Maryland. 
 It is not easy to put into figures or to estimate the exact 
 contribution of the railroad to the economic interests of the 
 country along its route. But in a general way these effects 
 can be indicated by statements regarding the part played 
 by the railroad in the development of the towns and of the 
 mineral, agricultural and other resources of the state. The 
 development of the natural wealth of Maryland' led to an 
 increase in trade and comrnerce as well as in manufactures. 
 This in turn exerted important influence upon the growth of 
 the towns and, more especially, of Baltimore. 
 
 Had the Baltimore and Ohio Railroad not been built at 
 the time and by the means actually employed, some other 
 line of railroad would undoubtedly have been constructed 
 sooner or later, connecting Baltimore with the West. Such 
 a railroad if built at a later date might have been constructed 
 at a smaller apparent cost, but it is doubtful if the real cost 
 would have been less. For in 1827 a railroad to the West 
 was a necessity brooking no delay, and although the Balti- 
 more and Ohio up to the completion to Wheeling paid no 
 adequate dividends to its stockholders, yet it paid largely 
 to the people of Maryland in a positive way by developing 
 their resources, and in a negative way by preventing the loss 
 of the internal trade of Maryland and of the West. 
 
 Effects upon the Industries of Maryland. 
 
 The effect of the railroad in stimulating the industries of 
 Maryland is perhaps nowhere better shown than in the 
 development of coal mines, iron mines and quarries. 
 
347] Baltimore and Ohio Railroad, 1827-1853. 73 
 
 Before the railroad reached Cumberland in November, 
 1842, the rich coal deposits of Western Maryland had been 
 practically unworked. The residents of Frostburg, then a 
 straggling hamlet, and some of the residents of Cumberland 
 had been in the habit of digging a few hundreds of bushels 
 out of the surface veins during the winter. This coal was 
 loaded on flat-boats and floated down to Alexandria by 
 means of the spring floods which deepened the Potomac. 
 Here boats and cargo were sold and the crews generally 
 walked back to Cumberland. 
 
 With the extension of the railroad to Cumberland real 
 work in the mines began. Several contracts were made 
 between the railroad and mining companies for the trans- 
 portation of coal and iron to the eastern market, and the 
 railroad company commenced to provide better facilities 
 in the way of cars, side-tracks and switches for the rapid 
 carriage of mineral freights. Large coal wharves were built 
 by the railroad company at Locust Point in Baltimore to 
 provide easy means of transhipment of coal from the cars 
 to the holds of vessels, and the building of similar private 
 wharves was encouraged by the offer of a lower rate for the 
 transportation of coal. By 1850 the rich coal region around 
 Cumberland and Frostburg had already been much devel- 
 oped, and the demand for this coal was increasing more 
 rapidly than the facilities needed to bring it to market. In 
 1851 several companies owning lands in the coal basin about 
 Westernport began to open mines along the line of road 
 west of Cumberland. The traffic received a temporary 
 check in the winter of 1852, owing to the failure of the 
 Maryland Mining Company in October, 1851, and the 
 heavy rates of pilotage of vessels entering and leaving the 
 harbor of Baltimore during the opening months of 1852, 
 but the business soon began to increase beyond its former 
 volume, and by the fall of 1852 the company had applica- 
 tions for coal contracts aggregating several thousand tons 
 per day. Much coal freight was also expected from the 
 piercing of a vast coal basin by the George's Creek Railway, 
 
74 The Economic History of the [348 
 
 under construction in 1852 and planned to connect with the 
 Baltimore and Ohio at Piedmont. Before 1843 there is no 
 mention of the. transportation of any coal whatever over the 
 Baltimore and Ohio. During that year but 4,964 tons were 
 transported. In 1850 the shipments of coal eastward over 
 the Baltimore and Ohio aggregated 132,534 tons; in 1851, 
 139,110 tons, and in 1852, in spite of many obstacles to the 
 traffic, 132,306 tons. 
 
 The iron deposits of the state, although worked earlier, 
 were not developed to such an extent as the coal mines. 
 1,574 tons of iron were shipped to the east in 1832; five years 
 later the year's shipment amounted to 4,883 tons. The 
 amount of iron began to decrease after this until the road 
 reached Cumberland, when the working of the iron deposits 
 in Alleghany county led to largely increased shipments, not 
 only of iron, but also of iron ore. In 1851, 10,956 tons of 
 iron and 4,386 tons of iron ore were shipped to the east. 
 
 The extension of the Baltimore and Ohio likewise greatly 
 encouraged the opening of quarries. The shipment of 
 granite, lime, soapstone and limestone to the east amounted 
 in some years to over 10,000 tons, whereas the high cost of 
 transportation had heretofore made the working of quarries, 
 except in the immediate vicinities of the large towns, un- 
 profitable. Fire-brick was shipped during and after 1849 
 at the rate of hundreds of tons per year. 
 
 Flour and tobacco were the principal agricultural pro- 
 ducts of Maryland during this period, and the extension of 
 the railroad westward is marked by an increasing shipment 
 of these commodities to the eastern market. Before 
 the construction of the railroad these products had been 
 brought by wagons to Baltimore, but at considerable ex- 
 pense and with many delays incident to unfavorable weather. 
 ElUcott's Mills was a center of the flouring industry, and 
 the construction of the railroad to this particular place was 
 caused by the need of adequate facilities for the transporta- 
 tion of flour from the mills to tide-water in Baltimore. 
 
 In the year ending September 30, 1832, some 12,610 tons 
 
349] Baltimore and Ohio Railroad, 1827-1853. 75 
 
 of flour (146,936 barrels) were carried by the railroad from 
 Ellicott's Mills and Frederick to Baltimore. In 1842 twice 
 as many tons (25,233) were shipped eastwardly through the 
 state via the Baltimore and Ohio, and in 1852 no less than 
 66,377 tons were so shipped. The encouragement given to 
 agriculture is also shown by the fact that but 353 tons of 
 grain were shipped eastward in 1832, while in 1852 nearly 
 5000 tons were so shipped. 
 
 The shipments of tobacco increased from 174 tons in 1832 
 to 1,510 tons in 1843, ^^^ to 2,322 tons in 1848, but dimin- 
 ished in size in the next few years. Shipments of meal in- 
 creased from 512 tons in 1832 to 3,174 tons in 1852. 
 
 Maryland was not noteworthy as a cattle-raising state, and 
 the live stock needed in Baltimore for local consumption 
 was driven to town from the nearby regions along the high- 
 ways. But with the westward extension of the railroad a 
 slowly increasing demand arose for cattle from the interior. 
 There is no record at all of live-stock shipped eastward in 
 1832; in 1834 only 23 tons were so shipped. In 1843, ^ 
 year after the railroad had been completed to Cumberland, 
 1,219 tons of live-stock were transported to the east, and in 
 1849 the maximum of 18,991 tons was reached. 
 
 After the railroad reached Cumberland lard and butter 
 acquired some prominence as articles of eastern shipment, 
 amounting in some years to nearly 1,800 tons. 
 
 Whiskey was an important article of shipment, the 
 amount shipped east increasing from 66 tons in 1832 to 
 1,1 1 1 tons in 1848. Bark for tanning purposes, leather and 
 firewood were other commodities which were given a new 
 value in the places of their production through the facility 
 and cheapness of transportation afforded by the railroad. 
 General farm products, such as potatoes, cabbage, vege- 
 tables, fruits, etc., also found a wider and better market with 
 the operation of the railroad. After the railroad reached 
 Cumberland the shipments of these products increased from 
 hundreds to thousands of tons. 
 
76 The Economic History of the [350 
 
 Growth of Towns. 
 
 The opening of the road marked the beginning of a new 
 era in the history of Cumberland. The city was made the 
 point of exchange for passengers and merchandise between 
 East and West. Hotels and warehouses were erected. The 
 facihties afforded for rapid transportation over the mountains 
 greatly increased the travel between Cumberland and the 
 West. This is evidenced by the larger use of the National 
 Road after the completion of the railroad to Cumberland. 
 From March i to March 20, 1849, ^° l^^s than 2,586 pas- 
 sengers were carried over the National Road. In 1830 the 
 population of Cumberland was 1,162, in 1840 it was 2,384, 
 and in 1850 in was 6,105. When the Baltimore and Ohio 
 was completed to Wheeling in 1853 the effect was soon felt 
 in Cumberland. Most of the stage lines were taken off and 
 the business of transferring merchandise was greatly dimin- 
 ished. But Cumberland continued to grow in wealth and 
 population, and in this growth the railroad played an im- 
 portant part.' 
 
 The effect of the extension of the railroad upon the devel- 
 opment of other Maryland towns was almost immediately 
 beneficial, although not always capable of accurate measure- 
 ment. When Frederick was connected with Baltimore in 
 December, 1831, a ready market for the products of the 
 surrounding region was established and land values were 
 enhanced. The effect upon reaching Point of Rocks has 
 been described.'' The completion to Harper's Ferry secured 
 connection with the Potomac and Winchester Railroad, 
 penetrating the most fertile parts of Virginia. Harper's 
 Ferry marking both a physical and commercial break in 
 transportation, grew in population, wealth and importance 
 after this time. 
 
 Before the railroad reached Cumberland, Frostburg was 
 but a straggling village of a few hundred souls.' After the 
 
 ' Cf. W. H. Lowdermilk, " History of Cumberland," pp. 349-376. 
 ' See above, pp. 26-27. 
 J. T. Scharf, " History of Western Maryland," Vol. II. 
 
351] Baltimore and Ohio Railroad, 1827-1853. 77 
 
 opening of the mines, due to the railroad, a number of min- 
 ing companies set actively to work, employing hundreds 
 of men and establishing the nucleus of a flourishing and 
 prosperous town. 
 
 The railroad was a great stimulus to the growth of the 
 population, trade, manufactures and wealth of the city of 
 Baltimore during the period from 1827 to 1853. Nearly 
 2,000,000 tons of commodities, including flour, tobacco, 
 grain, live-stock, coal, iron, wood, leather and building stone, 
 were shipped into Baltimore from the West alone via this 
 railroad during this period, and either distributed by Balti- 
 more shipping or utilized in new local manufactures. By 
 the time the railroad was completed to Wheeling the indus- 
 tries of Baltimore included iron and copper works, woolen 
 and cotton manufactures, flouring mills, manufacturers of 
 white-lead, glass, shot, printer's ink, types, pottery, agricul- 
 tural implements, powder, carpetings, house furniture, hats, 
 cloth, etc., as well as distilleries and sugar refineries.' Not 
 only had the railroad encouraged the establishment of these 
 industries by transporting to Baltimore at low cost the raw 
 materials required, but it also distributed in part the manu- 
 factured products throughout Maryland. Thousands of tons 
 of these commodities were transported westward by the 
 railroad every year, as well as large quantities of fish and 
 oysters from the Chesapeake Bay, which were unloaded at 
 the Baltimore wharves. During 1852 over 75,000 tons of 
 merchandise were transported westwardly. The commodi- 
 ties shipped included salt, coffee, sugar, molasses, fish, 
 oysters, lumber, plaster, dry-goods, manufactured iron, fur- 
 niture, vehicles and machinery, drugs and paints, oils, 
 groceries, guano and manures, bricks, etc. About 8,50a 
 tons went to Frederick, 3,350 tons to Harper's Ferry, 9,500 
 to Winchester, 1,350 to Martinsburg, 24,500 to Cumberland, 
 and nearly 30,000 tons to other points along the road.'' 
 
 ' De Bow, " Industrial Resources of the South and West," Vol. I, 
 p. 103- 
 
 * Apropos of the dependence of Baltimore upon the West, J. H. 
 B. Latrobe remarked at a banquet given in honor of the opening 
 
78 The Economic History of the [352 
 
 Finances of the Railroad. 
 
 During the period from 1827 to 1853 the finances of the 
 Baltimore and Ohio present none of those complexities 
 which appeared in the later history of the railroad. The 
 organization of the company and the management of its 
 business were directed to the single object of making the 
 road an efficient channel of communication between the 
 East and the West. The company had no speculative pur- 
 poses in view, but simply attempted to make the railroad a 
 paying investment to the bona fide stockholders. This 
 policy was consistently carried out. The company's stocks 
 represented actual money paid in for the purpose of con- 
 structing and equipping the railroad. They were not watered 
 for the profit of the originators of the road. Even when 
 " scrip " was issued, from 1848 to 1853, it represented net 
 earnings applied to construction and repairs, and was not 
 issued simply to reduce nominal dividends. 
 
 The bonds issued by the railroad company during this 
 period were for money urgently needed. Although some of 
 these bonds were sold as low as 80 with par at 100, yet the 
 sales seem to have been justified by the necessity of finish- 
 ing the road. This alone could make the railroad pay any 
 returns, or indeed prevent the practical loss of a large part 
 of the sums already expended. 
 
 The dividends during the period 1827-1853 were as 
 follows: 
 
 January, 1831 $0.37)4 
 
 January, 1832 60 
 
 July, 1832 75 
 
 February, 1833 75 
 
 October, 1835 1.12}^ 
 
 of the railroad to Wheeling in January, 1853, " The West built up 
 Baltimore — first with the pack-saddle, then with the country road, 
 then with the turnpike, and is now about to employ the greatest 
 agent of modern times to realize the destiny appointed by Provi- 
 dence." 
 
353] Baltimore and Ohio Railroad, 1827-1853. 79 
 
 October, 1840 $2.00 
 
 October, 1841 2.00 
 
 October, 1843 ; . . . . 2.00 
 
 October, 1844 2,50 
 
 October, 1846 ($1 cash, $2 bonds) 3.00 
 
 November, 1847 ($3 in bonds at 6^) 3.00 
 
 November, 1848 (stock) 3.50 
 
 November, 1849 (stock) 5.00 
 
 November, 1850 (stock) 7.00 
 
 November, 1851 (stock) 7.00 
 
 • November, 1852 (stock) 7.00 
 
 May, 1853 (stock) 3.00 
 
 From the above enumeration it will be seen that the rail- 
 road at no time during this period was really a paying in- 
 vestment to the stockholders. The railroad paid only in 
 the sense that it preserved and increased the trade of Balti- 
 more with the West. The road was practically built three 
 times east of Harper's Ferry during this period, and the 
 great cost of construction, equipment and repairs prevented 
 any large net earnings. 
 
 The issue of stock-orders by the company in 1839 and 
 1840, as detailed above,' was a financial measure which 
 served the railroad well by enabling it to make use of 
 Baltimore's subscription at a time when funds were needed 
 and the possibility of floating the city stock doubtful. That 
 the stock-orders circulated for a time at par and as currency, 
 however, does not prove at all that such a form of money 
 was desirable. The eventual depreciation of the certificates 
 worked much hardship to laborers obliged to receive them 
 in payment for work. Public opinion was roused to such 
 an extent that in March, 1846, the legislature of Maryland 
 prohibited the railroad company from issuing " anything in 
 the nature of a bank note or other paper to be used for 
 circulation as a currency." ' 
 
 ' See pages 47-48. ^ Acts of Maryland Assembly, 1845, ch. 313. 
 
80 The Economic History of the [354 
 
 While the general financial policy of the company was 
 to complete the road as originally projected as soon as 
 possible, in order to secure for the stockholders adequate 
 returns on their investments, yet the particular manner in 
 which the policy was carried out differed somewhat under 
 the three presidents of the railroad who guided its affairs 
 during this period. 
 
 Under President Philip E. Thomas (1827-1836) the mag- 
 nitude of the undertaking was not clearly seen, and conse- 
 quently adequate provisions were not made for securing 
 the capital necessary to carry the work to completion. A 
 policy, perhaps too cautious, was pursued with regard to 
 expenditures, and profits were divided which were too small 
 to be advantageously distributed and which would have been 
 more effective if used in the improvement and extension of 
 the road. 
 
 During the administration of President Louis McLane 
 (1836-1848) the results of this policy became evident. A 
 cheaply constructed and imperfectly planned railroad proved 
 not only entirely inadequate for the purposes for which it 
 was needed, but its defects were the cause of the expenditure 
 of large sums of money for repairs and reconstruction, which 
 ought to have been available for the extension of the road to 
 Cumberland. To add to the difficulties of the company 
 came the panic of 1837. The years 1838 and 1839 were the 
 darkest in the history of the Baltimore and Ohio during 
 the whole period before 1853, and work had to be suspended. 
 With the help of city and state loans the company resumed 
 construction and net receipts began to increase. From 
 1836 to 1840 the company used its earnings for new con- 
 struction, and borrowed only where absolutely necessary to 
 keep the road in running order. The device of paying some 
 dividend in order to raise the credit of the company was 
 employed from 1840 to 1847. 
 
 The policy of President Thomas Swann (1848-1853) was 
 the completion of the road to the Ohio at any cost as a con- 
 dition precedent to its successful operation. Earnings were 
 
355] Baltimore cmd Ohio Railroad, 1827-1853. 81 
 
 used as capital and dividends declared in stock; bonds were 
 issued to be sold at a high price if possible; but, in any 
 event, to be sold. Everything that would perfect the road 
 with regard to the route and to equipment was tried. 
 To obtain the carrying trade of Virginia, the Winchester and 
 Potomac Railroad was bought. Acts of the Virginia legis- 
 lature were accepted not altogether to the liking of the com- 
 pany in order to complete the railroad to Wheeling. It 
 was confidently expected that adequate returns on capital 
 would be secured after that point had been reached. The 
 financial policy of President Swann may be summed up in 
 the phrase, " Finish the railroad as rapidly and as thor- 
 oughly as possible; it will pay, no matter what it may seem 
 to cost." 
 
 The Maryland legislature acted as a real arbitrator be- 
 tween the Baltimore and Ohio Railroad and the Chesapeake 
 and Ohio Canal, not only in regard to right of way, but also 
 in the attempt to arrange for a division of traffic on the two 
 lines of transportation. An attempt of the Maryland legis- 
 lature to secure the co-operation of the two companies in 
 the transportation of coal from Cumberland is an instance 
 in point. 
 
 The fixing of rates by Maryland and Virginia in the char- 
 ters and in subsequent legislation has been previously noted. 
 The railroad was regarded during the earlier part of this 
 period as essentially a special kind of highway or toll road. 
 The rates were generally fixed as maximum rates, and at 
 first were based entirely on weight.' 
 
 The state of Maryland and the city of Baltimore occupied 
 a unique position during most of this period by the exercise 
 of direct control over the afifairs of the railroad company. 
 As stockholders they were entitled to have directors to 
 represent their interests ; but these directors were not elected 
 
 ^ Some of the laws fixing rates are: Maryland Acts, 1826, ch. 123, 
 sec. 18; 1830, ch. 117; 183s, ch. 395, sec. 9; 1836, ch. 261; 1840, ch. 86; 
 1840, ch. 370. Virginia Acts: Charter, 1827; 1837, ch. 118, sec. 24; 
 1839, ch. 98, sec. 4, etc. 
 
82 The Economic History of the [356 
 
 by the general body of stockholders, but were appointed 
 by the governor in the case of the state, and by the joint 
 ballot of both branches of the City Council in the case of the 
 city. Baltimore was given two directors in the company for 
 its first subscription of 5,000 shares in 1827, and one director 
 for each 5,000 shares of its subsequent subscription of 
 $3,000,000 in 1836. The city was to have in no case more 
 than twelve directors in all. Maryland had two directors 
 for the subscription of 5,000 shares in 1827 and was author- 
 ized to appoint one additional director for each 5,000 shares 
 subscribed in 1835, on account of the $3,000,000 subscrip- 
 tion. When the state sold its interest in the Baltimore and 
 Ohio (authorized by act of Assembly of 1842, ch. 301, passed 
 March 10, 1843) the right of appointing directorships of 
 course stopped. 
 
 The beginnings of discrimination in rates between com- 
 petitive and non-competitive points are to be noted in the 
 early years of the company. Petitions were received from 
 time to time after 1840 from merchants engaged in the flour 
 trade in Baltimore, stating that in consequence of the low 
 rates charged on the Chesapeake and Ohio Canal the ship- 
 ments of flour were being rapidly diverted from the Balti- 
 more market to the District of Columbia. The flour trade 
 had always been considered of great importance to the 
 prosperity of Baltimore, and as long as communication with 
 the interior had been kept up by turnpikes almost the entire 
 product of Maryland and of a considerable portion of Penn- 
 sylvania and Virginia had been brought to the Baltimore 
 market and had constituted a most important element in the 
 growth and prosperity of that city. But owing to the com- 
 petition in transportation due to the above-mentioned canal 
 and the Cumberland Valley Railroad — extending from 
 Chambersburg to Philadelphia — the flour inspections at Bal- 
 timore for several years past, instead of having increased 
 with the growth and settlement of the country, had scarcely 
 equaled those of an earlier period. Reduction in rates of 
 transportation was therefore asked for. 
 
357] Baltimore and Ohio Railroad, 1827-1853. 83 
 
 The board of directors of the railroad recognizing that 
 not only the trade in flour would be further diverted from 
 the Baltimore market, but also a considerable portion of 
 business more or less inseparably connected with the flour 
 trade, entailing not only a serious loss to the city, but also 
 a definite and absolute loss of traffic to the railroad, resolved 
 in 1845 to reduce charges only along that portion of the road 
 which was adjacent to the Chesapeake and Ohio Canal to a 
 minimum which would at least pay the expenses of trans- 
 portation. This is perhaps one of the very earliest instances 
 on record of discriminations in rates due to the rivalry of 
 competitive points. Nothing was done to prohibit this at 
 the time.* 
 
 Improvements in Technique. 
 
 The Baltimore and Ohio Railroad, as one of the pioneer 
 roads in America, encountered and solved niany difficult 
 problems in the mechanics of railroading. Car wheels, for 
 example, were first constructed with the flange on the inside 
 edge. This caused many a derailment and many a broken 
 wheel, and led to the invention of the outside flange car 
 wheel. Still the wheel was unsatisfactory, especially in turn- 
 ing curves, and the invention of the conical flange was the 
 result. Car wheels at this time were constructed of cast 
 iron. To the Baltimore and Ohio must also be attributed 
 the anti-friction box on the axles of the car wheels, and the 
 use of the eight-wheeled car, both inventions of Ross 
 Winans. During the period 1830 to 1853 radical and im- 
 
 ^ Virginia passed a law, March 6, 1847 (Acts of Virginia, 1846, ch. 
 99) against discrimination in rates on the Baltimore and Ohio Rail- 
 road with regard to long and short hauls, forbidding the company 
 to " charge for transportation or travel to or from Baltimore from 
 or to any point distant more than five miles in a direct line from 
 the Ohio river more in the aggregate than for transportation or 
 travel from Wheeling to Baltimore, or from Baltimore to Wheeling 
 respectively, nor more in the aggregate from any depot west of 
 Harper's Ferry to Baltimore, or from Baltimore to such depot, than 
 from any other depot more distant from Baltimore to Baltimore, or 
 from Baltimore to such last-mentioned depot." 
 
84 The Economic History of the [358 
 
 portant changes were made in the construction of steam 
 locomotives, and the introduction of the " Grasshopper " and 
 " Camel " types are due to the Bahimore and Ohio and its 
 engineers. When completed to Wheeling the road-bed em- 
 bodied the results of the highest engineering skill in con- 
 struction over the Alleghany mountains, and included the 
 longest railroad bridges and trestles and the longest tunnels 
 of any railroad in America. Many valuable improvements 
 in track-construction, road-bed, stringers, ballast, switches, 
 turn-outs, and especially in the method of laying of rails for 
 turning sharp curves, are attributable to the Baltimore and 
 Ohio Railroad. 
 
 ^ See " Address " by President Mendes Cohen, delivered before 
 the American Society of Civil Engineers, June, 1892, " Proceed- 
 ings," pp. S3S-SS8. 
 
359] Baltimore and Ohio Railroad, 1827-1853, 85 
 
 VII.— APPENDIX 
 
 I. — Chronology of the Baltimore and Ohio 
 Railroad. 
 
 First general meeting of citizens contemplating a railroad, 
 
 February 12, 1827. 
 Act of incorporation granted by Maryland, February 28, 1827. 
 Act of incorporation confirmed by Virginia, March 8, 1827. 
 Requisite amount of stock for organization subscribed by April I, 
 
 1827. 
 Company organized; directors elected, April 23, 1827. 
 Preliminary surveys begun, July 2, 1827. 
 Actual surveys begtin, November 20, 1827. 
 
 Charter confirmed by the state of Pennsylvania, February 22, 1828. 
 Maryland became a stockholder, March 6, 1828. 
 Corner-stone laid, July 4, 1828. 
 Railroad opened to Ellicott's Mills, 14 miles (horse-power), May 
 
 22, 1830. 
 Trial of the first steam locomotive on the Baltimore and Ohio 
 
 Railroad, August 25, 1830. 
 Railroad opened to — 
 
 Ellicott's Mills, 14 miles (steam-power), August 30, 1830. 
 
 Frederick, 61 miles, December i, 1831. 
 
 Point of Rocks, 69 miles, April i, 1832. 
 
 Harper's Ferry, 81 miles, December I, 1834. 
 
 Hancock, 123 miles, June i, 1842. 
 
 Cumberland, 178 miles, November S, 1842. 
 
 Piedmont, 206 miles, July 21, 1851. 
 
 Fairmont, 302 miles, June 22, 1852. 
 Last spike driven; finished, Baltimore to Wheeling, 379 miles, 
 
 December 24, 1852. 
 First train reached Wheeling from Baltimore, January i, 1853. 
 Railroad opened, Baltimore to Wheeling, 379 miles, January 10, 
 
 1853. 
 
86 The Economic History of the [360 
 
 2. — Cost of Construction. 
 
 Baltimore to Harper's Ferry $ 4,000,000.00 
 
 Harper's Ferry to Cumberland 3,623,606.28 
 
 Cumberland to Wheeling 6,631,721.00 
 
 First cost of 379 miles of railroad $14,255,327.28 
 
 Cost of reconstruction, etc., east of Cumberland 962,589.02 
 
 Extension to Locust Point 180,205.63 
 
 Camden Street Station (ground) 230,841.31 
 
 Grand total $15,628,963.24 
 
 Estimated cost of construction (Feb., 1827), $5,000,000. 
 
 Real cost of construction (Jan., 1853), $15,628,963.24. 
 
 Estimated length of road (Balto. to the Ohio river) (Feb., 1827), 
 
 290 miles. 
 Real length of road (Balto. to the Ohio river) (Jan., 1853), 
 
 379 miles. 
 Estimated revenues per annum (Feb., 1827), $750,000.00. 
 Real revenues per annum (Oct. i, 1853), $2,033,419.80. 
 
361] Baltimore and Ohio Railroad, 1827-1853. 87 
 
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S- — Bibliography. 
 
 1. Annual Reports of the President of the Baltimore and 
 Ohio Railroad Company (1827-1853). 
 
 2. Reports of the Treasurer, the Engineers, the Masters 
 of the Road, of Machinery and of Transportation respec- 
 tively, of the Baltimore and Ohio' Railroad Company (1827- 
 
 1853). 
 
 3. Various reports, pamphlets, broadsides, etc., etc., to 
 be found in the library of the Maryland Historical Society 
 of Baltimore, covering the period 1827-53. 
 
 4. Contemporary files of the Baltimore American and 
 Daily Commercial Advertiser (1827-1853). 
 
 5. Scharf's History of Maryland. 3 vols. Baltimore, 
 1879. 
 
 6. Niles' Weekly Register (1826-1836). 
 
 7. " The Book of the Great Railway Celebrations of 1857." 
 W. P. Smith. New York, 1858. 
 
 8. " Railroads: their Origin and Problems." Charles 
 Francis Adams, Jr. New York, 1878. 
 
 9. " Bibliography of the Baltimore and Ohio Railroad 
 Company, 1827-1879." John W. M. Lee. Baltimore, 1879. 
 
 10. " A History and Description of the Baltimore and 
 Ohio Railroad," etc. [W. P. Smith.] Baltimore, 1853. 
 
 11. " The History of the First Locomotives in America." 
 William H. Brown. New York, 1871. 
 
 12. " Laws and Ordinances relating to the Baltimore and 
 Ohio Railroad Company." J. Murphy & Co., PubUshers, 
 Baltimore, 1850. 
 
 13. " History of Cumberland." W. H. Lowdermilk. 
 Washington, 1878. 
 
 14. " The History of Western Maryland." J. T. Scharf. 
 
 2 vols. 
 
 15. " Industrial Resources of the South and West." J. B. 
 De Bow. 3 vols. New Orleans, 1852-53. 
 
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 3AN 3 1 Vi 
 
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 1955. 
 
 
 
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 s. Ctt.no. 1139.2 
 
 
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 HE 2791.B2R4 
 
 The economic history of the Baltimore an 
 
 3 1924 002 400 285