UNIVERSITY OF WISCONSIN STUDIES IN THE SOCIAL SCIENCES AND HISTORY NUMBER 2 THE RESTORATION OF THE SOUTHERN RAILROADS BY CARL RUSSELL FISH PROFESSOR OF AMERICAN HISTORY MADISON 1919 UNIVERSITY OF WISCONSIN STUDIES NUMBER 6 AUGUST. 1919 SOCIAL SCIENCES AND HISTORY NO. 2 PRICE. 50 CENTS Pulîiishcd bl-tnonthly by the University ol Wisconsin, at Madison. Wisconsin Entered as second class matter Ausrust 31. 1919. at the postofflee at Madison. WlscDB- sin under the Act of August 24, 1912. Accepted for mailing at special rates ol postage provided for in section 1103. Act of October J, 1917. Authorized September 17, 1918. No 1. The Colonial Citizen of New York City, by Robert Francis Seybolt 40p. Fifty cents. No. 2. The Restoration of the Southern railroads, by Carl Russell Fish. 28p Fifty cents. UNIVERSITY OF WISCONSIN STUDIES IN THE SOCIAL SCIENCES AND HISTORY NUMBER 2 THE RESTORATION OF THE SOUTHERN RAILROADS BY CARL RUSSELL FISH PROFESSOR OF AMERICAN HISTORY MADISON 1919 THE RESTORATION OP THE SOUTHERN RAILROADS It is unneeessarj- to point out the importance of trans¬ portation to modern civilization. The precise importance of railroads in the system of transportation at the close of the Civil War, however, is a matter that requires some defini¬ tion. The southern portion of the United States is splendidly provided with waterways, large portions of it developed be¬ fore railroads were devised ; and it might seem that their destruction would not paralyze commerce, but only cause a return to previous conditions. A moment's thought shows that this could not be the case. Railroads had been operating for twenty-five years, and large areas had been settled not only in the newer states but also in the inter-river portions of the older which were absolutely dependent on the facilities they gave. The railroads, moreover, had changed the direction of trade all over the South, aud the destruction of the railroad would not of itself restore the system which previously served the regions developed before railroads became important. Warehouses and equipment for handling the returned trade would not appear over night, and perhaps still more serious would be the absence of known commercial connections. In the almost total lack of quick capital in the South after the war, the good name of private firms of merchants and of private bankers was a necessarj' asset. To have deflected trade routes would have gone far toward adding this to her other losses. In fact, a great industrial growth can not be pruned by cutting off the development of a given period, the growth has extended throughout the plant from topmost bough to root. Before long, we will see Europe in the throes of reconstruction, and it is safe to saj' that this will have to be accomplished by making the driving force fit the plant, by increasing the use of mechanical power, and by the im¬ portation of labor, rather than by reducing the industrial system to the diminished industrial forces of the mutilated 4 UNIVERSITY OF WISCONSIN STUDIES nations. The restoration of the southern railroad system, therefore, was a necessary preiiminarj* to the economic res¬ toration or reconstruction of the South. Doleful as the storj- of Reconstruction is in many respects, it is light itself compared to what it would have been without the rickety progress of the snail-like southern freight. In the general absorption over political reconstruction, however, the restoration of this fundamental is left to the imagination. Only a miracle could have provided the South with the ordinary means of transportation in 1865, but the miracle happened, and this is its gospel. The skeleton of the southern railroad system had been planned with remarkable foresight and was almost complete before the war broke out.' During the war, it was completed. The unfinished links of the eastern through route from Rich¬ mond to New Orleans," that from Danville to Greensboro, and from Selma, Alabama, to Meridian, Mississippi,* were built, and a spur thrust forward to bring Florida beef over the Georgia roads to Lee's army.* These were, however, hardly additions if we consider the system as a whole, for much of the material was secured by tearing up less essential lines,* while still other branches yielded the rails that supplied most of the armor of the Con¬ federate rams." These petty readjustments, however, were as nothing compared with the wear without repair that in four 3-ears ate the heart out of the sj'stem. When the war began, the Confederate railroads were well regarded bj' investors.' The.v were built in part by bonds sold to foreign and nothern capitalists, in part by monej- paid by the state for shares. Most of the share capital, however, was owned by people along the lines, who had paid money * Phillips, U. B.. History of Transportation íb Cong., No. 34. 407, eighteen and two-thirds miles were constructed. Am. R. R. J., 1865. p. 725; H. Reports of Comm., Sd aeaa., ^th Cong., No. 3, 65, etc. H. Reports of Comm.. 2d seas.. S'Mh Cong., No. 34, 143-146, 279. "/bid., 245. "/bid., 35, 71, 78, actually flnished April 1, 1865: produced railroad iron at cost of $35 per ton. when the government was paying from $40 to $130; /bid., 424; H. Exec. Doc., Ist aess., S9th Cong., No. 1. Report of McCallum, May 26, 1866 : It was .«»old at auction October 5, 1865 for $175,000, not a bad price considering that the United States could not give title to the land, H. Reporta of Comm., Sd aeaa., S9th Cong., No. 34. S5. " 433 engines and 6.605 cars were used; of the engines. 282 were pur¬ chased. 36 built, and 115 captured ; of the cars. 6,380 were purchased. 609 built, and 616 captured; 260 engines and 3,383 cars were for use In the Mississippi region. Ibid., 322 ff. FISH—SOUTHERN RAILROADS 11 commandeering what was building.Particularly the Ten¬ nessee system was prodigally supplied by a certain colonel whose extravagance caused his removal.^® These government trains carried over the reconstructed roads not only troops and their supplies, but private passengers and freight, which paid the usual rates.^' As a result of these dual processes of destruction and re¬ construction, the close of the war found the southern system ruined, but, on paper, more complete than before the war. The actual conditions varied from region to region. In Vir¬ ginia, the reconstruction was well done, but scant, as Grant relied so largely on water communications.''^ In North Caro¬ lina, the roads from the coast followed Shei-man's army to the border of Virginia. In the Georgia and South Carolina regions devastated by Sherman, there was little rebuilding, for he passed quickly on. In western Georgia, Alabama, and eastern Mississippi, there was little reconstruction and the destruction was of the sporadic character, produced by raids. In Louisiana, but particularly in Tennessee, the re¬ construction probably made good the destruction. On the whole, the United States was actually operating about one- third of the mileage of the South.'"' In the amorphous period of the spring and early summer of 1865, between war and peace, much was left to department officers, and varying policies were pursued. General Canby of the Gulf, where much of the system fell to him by sur- «/ftid., 158, 266-275. "Ibid., 173. *' The volume of private business over the Nashville and Chattanooga under government control was $632,910.72. Ibid.. 277 ff. McCallum reported 177 miles, 2,961 feet of road laid in Virginia, of which 122 miles and 5,163 feet were taken up. Ibid.. 403. A fair idea of the track put in operating condition by army is given by the statement of 3,630V^ miles operated, on 50 roads; the statement by Quartermaster Col. Alexander Bliss is more complete than that by McCallum, as it Includes a few that did not come under the latter's juris¬ diction, H. Reports of Comm., 2d sess., S9th Cong., No. 34, 313. It is to be compared with the total figure of about 9,000 miles for the Confederate area, Fish, Northern Railroads, 781. In considering the whole question of transportation, the 318 river boats, worth about $8,00 0,000, which were destroyed, should be consid¬ ered, H. Reports of Comm., îd sess., S9th Cong., No. 34, tables. 12 UNIVERSITY OF WISCONSIN STUDIES render rather than capture, first offered freedom from con¬ fiscation to all rolling-stock voluntarily turned over to him, and then ordered the roads to complete repairs promptly under penalty,"'" continue operations, and transact govern¬ ment business on the terms of the arrangement reached be¬ tween the government and the northern roads."' General Gilmore at Charleston, knowing the roads to be without credit, granted the Charleston and Savannah 10,000 rations'" to start their rebuilding. At Vicksburg, General Osterhaus undertook to reconstruct 32 miles of track, with bridges, be¬ tween Jackson and the Big Black." These orders were based on the principle that military necessity still existed, and that the proper distribution and maintenance of troops required the rapid restoration of the transportation system.'* One can not help regretting that this condition could not have lasted somewhat longer, for with its experience and facilities, the military department of railroads, as it then existed under General McCallum, could without a doubt have completed the task more quickly and efficiently than any private organization. To that generation of individuali.sts, however, such a sug gestion seems never to have occurred. General Sheridan con sidered that the railroads were military prize, and when captured became government property." He did not, how ever, propose that the government continue to operate the property thus acquired, rather it should sell it at auction." Repta, of Comm., 2d seas.. .Wi/i Cong., No. 34. 247, 496, all put lo repair except Jackson road. See also, H. Reports of Comm., 2d seas., S9th Cong., No. 34, 127. "77. Reports of Comm.. 2d seas., kOth Cong., No. 31. 28. the president oi the road says the order was not executed, the president of the North- eastern road says he was given rations for 100 men for a month. ",Am. R. R. J., Bept. 29, 1866; General Ord gave the Virginia Central permission to run on April 19. 1865. subject to revocation, H. Reports of Comm., 2d seas., iOth Cong.. No. 3. 7. " Am. R. R. J., Sept. 28, 1866 ; also H. Reports of Comm., td sees., S9th Cong., No. 34. 247. 496; General Osterhaus reported to Canby that the Jackson road had "neither capital, credit, nor enterprise" ; General Canby said of several roads that the companies were not "in a condition to put their roads in running order without the assistance of the military auth« orities." "/bid., 169-172. Ibid. FISH—SOUTHERN RAILROADS 13 Quartermaster General Meigs regarded them as "engines of war", which could be confiscated just like batteries, or if not so simply, at least under the confiscation acts, or at the very least all those used against the United States."' Stanton accepted neither this law nor practice. To him, railroads were private property. If captured they were at the disposal of the captor for all purposes of war, whether for use or destruction; with peace, the rights of the owner recurred to what was left."® Auctions he disapproved because experience taught him that "rings" could not be prevented from manipulating them for private advantage. Stanton's legal views were, of course, sound and generally accepted, but they merely gave a key to the handling of the problem. Most roads in the South were in the possession of the government ; there was still much government business to he done, private business was reviving. When, how, could the roads be turned over, and to whom? On May 19 and July 17, Quartermaster General Meigs took the initiative by writing to Stanton. He stated that the rail¬ road administration was costing the government $1,300,000 a month, that it would be most economical to turn them over to private ownership. He advised that they be returned to the several companies, on condition that the latter be reorganized with loyal boards of directors, that they be charged with the repairs performed by the government, and implying that railroad material in the hands of the govern¬ ment be sold at auction.®" The treatment of this proposal is wrapped in obscurity. Meigs believed that the modifications subsequently made in "/bid., 256. 266-275. "ibid., 272. H. Exec. Doc., 1st sess., S9th Cong., No. 165: H. Reports of Comm., 2d sess., S9th Gong., No. 3 4, 259. "All material for permanent way used in the repair and construction of the road and all damaged material of this class, which may be left along its route, having been thrown there dur¬ ing the operation of destruction or repair, to be considered as part of a read and given up with it," and all rolling stock originally belonging to the road to be returned as soon as possible. In the case of the Rogerville road which was "loyal", he gave iron in waive of iron taken from it, Ibid., 260. 14 UNIVERSITY OF WISCONSIN STUDIES it were the result of the personal influence of southern rail¬ road presidents on President Johnson.®^ If the matter was discussed in cabinet, it was deemed by Welles as a trivial detail. In fact, between the date of this letter and the issue of the first general order, there were few cabinet meetings, and President Johnson"- was in poor health, although not so poor as to prevent his being continually besieged by petition¬ ers of all kinds. At any rate, Stanton assumed full responsi- bilitj' for the policy adopted, and it seems probable that it was actually his own. The order came on August 8, and provided that the de¬ partmental commanders restore the roads as soon as possible to the companies, reorganized on a loyal basis. The roads were to be handed over as they stood, and were to agree to put forward no claims for damages. All rolling-stock and other property which could be identified as the property of the roads was to be given them, wherever found."' The two most striking provisions were that the roads were to be allowed to take over any government stock they desired at an appraised value, on a short term credit, only the surplus not desired by the roads being offered at auction ; and, secondly, that records be collected showing on the one side the amount expended on each road by the government, on the other the value of the services performed by that road. ® H. Reports of Comm., 2d aess., Sifth Cong., No. 34. 259 : the Virginia Board of Public Works, which controlled about two-flfths of the stock of the roads of that state did send J. M. Botts to Washington, and the state of North Carolina sent Dr. Powell ; representatives of various other roads are found there from time to time, H. Äeporfs of Comm., id aess., kOth Cong., No. 3, 18. 46, etc. ••There seems to have been a consultation between Johnson and Stan¬ ton, H. Reports Comm., 2d seas., S9th Cong., No. 34, 31. " H. Exec. Doc., lat aeaa., SiHh Cong., No. 165, Stanton to departmental commanders ; recognize board of directors "whose loyalty shall be es¬ tablished to your satisfaction", make a complete triplicate inventory of property originally belonging to the roads, and of that furnished by the government, the roads to select what they wished of the latter and pay a fair valuation In 12 months, the government officials to make a state¬ ment of all expense.s by the government for repair and all government receipts (this was done only by Thomas in Tennessee, H. Reports of Comm., 2d aess., S9th Cong., No. 34, 307), the Tennessee roads were to pay arrears on bonds guaranteed by the state, befoi^ declaring dividends, buildings were not to be considered a legitimate charge against the roads, nor rebuilding done to repair destruction done by the Federal army. FISH—SOUTHERN RAILROADS 15 The first of these provisions was undoubtedly wise, if it could be honestly administered. As Stanton pointed out, one of the primary purposes of the Union was the promotion of internal commerce.®'' For this purpose the restoration of the southern railroads was essential. General auctions would have caused delay, and would have been controlled by rings which would have resold the property to the roads; the gov¬ ernment would have gained nothing, the roads would have been more seriously burdened. One of the government staff afterward testified that the government received $3,000,000 more from the Tennessee division alone by the system it adopted than it would have by auction, a statement to be taken, of course, with some salt.®® The second provision was perhaps a proper one for the executive department to make, for it left it open to the legis¬ lative and judicial departments to review the principles in¬ volved,®® and to carry out another policy. In practice, it was most unfortunate, for it left it open to the railroads to in¬ trigue for a recognition of claims for services, and to the northern radicals to press claims against the roads for the money spent by the government in restoring them. Its real object was doubtless expressed by Thomas who stated; "I always thought the object was to place the condition of the railroads in such form that if it should ever be determined by the government to allow the railroads rent for the use of the roads, it would enable it to square up the account by charging them with the expenses incurred by the government for keeping the roads in repair."®^ The provisions of the bonds required from the railroads to secure the property they were to take were very severe, re¬ quiring personal security. As this could not be obtained. "Ibid., 266. Ibid., 143-146, Capt. F. J. Crilly, Asst. Quartermaster, in charge of reports on repair under order of August 8, nevertheless a very liberal guess. Meigs, who disapproved, considered that the military restoration left the whole judicial question open, Ibid., 256. Ibid.. 86. 16 INIVERSITT OF WISCONSIN STUDIES a modifying order was issued October 14, 1865, which allowed bonds on the security of the companies' rolling stock.®* The working out of these orders rested with the depart¬ mental authorities. In general, a liberal policy was followed. The question of loyaltj' was, of course, one allowing the widest latitude of interpretation. In most cases, pardon, whether under the general amnesty proclamation or special act of the President was regarded as suflScient, and on the whole the roads remained in southern hands, and very often in those of the old officials. When in 1866 General Hardee and General Beauregard turned up in prominent positions, many thought that liberality had become license and the govern¬ ment agent refused to recognize them.®* The most important single piece of work was done bj' General George Thomas in Tennessee. He appointed a board of officials consisting of railroad experts who travelled over the roads with representa¬ tives of the latter. Here alone did the accounts actually show the amounts spent on each road, and the volume of govern¬ ment busine.ss passing over it."" Questionable points were generally decided in favor of the roads. The connecting line between Danville and Greens¬ boro, which there was some ground for claiming as the prop¬ erty of the Confederate government and therefore now United States property, was turned over to the Richmond and Dan¬ ville.'^ In the same way, the Florida spur in the ease of which there was still better ground for a similar claim, was turned over to the Atlantic and Gulf. The Nashville and "H. Exec. Doc., 1st sess.. SUth Cong.. No. 165. 266-275. Stanton. "Ibid., 132. ^'Ibid., 173. Mr. S. C. Kellogg. Mr. McQueen, superintendent of the Schenectady locomotive works, and a Mr. Flnck, later In the shops of the Louisville and Nashville; they worked from Au^st to January, 1866, In connection with three representatives of the railroads involved. "This was turned over to the Treasury Department as Confeder¬ ate property, but was given to the company December 9, 1866, on bond to make no claim against the United States, and to restore any property properly belonging to other companies; it had a separate organization as Richtnond and Piedmont, but was really part of the Richmond and Danville : the Confederate government furnished 81.500.000, but part of the funds were subscribed by individuals; H. Report of Comm., 2d seas., ^th Cong., No. 3 ; testimony of A. S. Berford ; id 8€88., S9th Cong., No. 34. 98. FISH—SOUTHERN RAILROADS 17 Northwestern which had been at least half constructed by the United States government, was restored by special order." The policy of the war department was common sense and the facilitation of traffic, and it recognized that its decisions were subject to judicial review. Most of the departmental commanders seemed anxious to get rid of the railroads, though Colonel Boyd in North Caro¬ lina, who was making his pay, parted with them very re- luctantlj'." By July 7, 1866, the United States had retired from railroad business, the last operation being the sale of the Brazos line, constructed entire^' bj' the government, to a private company, for more than it cost, as General Sheridan boasted." For more than it was worth, perhaps, if one may judge by recent illustrations of it called out by the Mexican episode of 1916. On October 1, 1866, the quartermaster re¬ ported that of railroad property there remained only 700 tons of iron, 15 box and flat cars, 500,000 feet of bridge tim¬ ber, a dismantled engine, and some tools, all of which was advertised to be sold in October." It is to be noted that the telegraphs, which were separately handled, were also dis¬ posed of.'® The job of president of a restored southern railroad was a lively one. Economy was no question of choice. He could afford no surplus stock, his government purchases must just supplement the actual insufficiency of his own. But how ''Ihid., 101 ; H. Exec. Doc., 2d sess., 40th Cong., No. 73, 7. Repoi'ts of Comm., 2d sess., S9th Cong., No. 34, 124, from August 1 to October 23, he received $160,515.93 and paid $81,178.34. See note 30, it was sold for $40,000 more than it cost. H. Reports of Comm., 2d sess., S9th Cong., No. 34, 433. "The order of the Quartermaster-General of February 27, 1866 seems more liberal than that relating to railroads, for they were turned over to the companies owning the "telegraph patent rights" in the several regions, in consideration of the relinquishment by the companies "of all claims against the United States for the use of their patents, for the use of their lines preceding their final restoration, and for all losses by the exclusion of commercial business" ; the lines north of the Ohio had been closed from time to time. The United States built 14,211 miles of land telegraph, 178 of submarine, and 10 00 miles of temporary field lines, besides controlling 50 00 miles of company lines; the telegraph budget was $3.219,400.00 ; H. Reports of Comm., 2d sess., S9th Cong., No. 34, 434, 18 UNIVERSITY OF WISCONSIN STUDIES much of that remained and where was it Î " Gentle shepherd, tell me where?" Fleeing the advancing Union forces, it had run over the whole South, and might now be shunted up some remote up-country branch with miles of railless grades be¬ tween it and home. When the whole Nashville and Chatta¬ nooga roadway was occupied by Union forces in 1863, a con¬ trolling portion of the governing board and nearly all the stock had been run off south, where it had conducted so pros¬ perous a business that it had paid dividends on the whole road.''' President Burns found fourteen engines and a hundred flat cars hiding up branch lines in Georgia. The splendidly equipped Georgia state line from Atlanta to Chattanooga had been milked by the Confederate government early in the war, and its cars and engines were to be found wherever the gauge permitted them to run. To a considerable extent, the military commanders acted as the shepherds that brought home the errant stock." But not rolling stock alone had wandered. As we have seen, the rails themselves had caught the mobility which they fostered. Railroad presidents had an uncanny eye for such violators of the catechism direction to be content in the position to which it had pleased God to call them. Enhanced price and empty pockets gave value to all those twisted cork¬ screws which marked the line of Sherman's march. But complications arose. If rails had been taken from the Nash¬ ville and Decatur and relaid on the Nashville and Chatta¬ nooga, to whom did they belong? If rails had been torn up by the Union army, thrown into a junk heap with others, and sold, what rights had the original owner? Consider the case of the Macon and Brunswick railroad. Owned largely by northern capital, its northern stock had been sequestered by the Confederate government, and in part sold. When Bruns¬ wick was threatened by the Union fleet, the iron had been taken up and purcha.sed by the Confederate government. Part of it had been used for iron dads, part laid on grades pre¬ pared by a road which was the joint property of the Atlantic H. Exec. Doc., 2d sess., ^Oth Conff.. Xo. 73. 4. /f. Reporta of Comm., Sd aeaa., Mfth Conp., No. 3. 109. FISH—SOUTHERN RAILROADS 19 and Gulf and the Pensacola Branch, run bj' the Atlantic and Gulf during the war, and returned to it afterwards. Were the rails the property of the Atlantic and Gulf, of the United States government as heir of that of the Confederacy, of the innocent purchasers of the stock sequestered by the Con¬ federacy, or the original owners of the Brunswick road?^® I will not prolong this article to decide. In fact, lodging the question in the Federal courts, I, myself, left it, trusting that generally wise tribunal. I cite the case to illustrate the tangle of claims which involved the struggling companies. The militar}' seem invariably to have adopted Alexander's method in dealing with the Gordian knot, and blotting out past histories, acted on the status quo post bellum. The re¬ stored roads, however, were, of course, free to reopen such questions before the courts, yet the number of legal compli¬ cations actually tried out is but a feeble suggestion of what would have been the number had not the military, by its sim¬ ple theory, created that presumption of possession which is so often nine-tenths of the law.®" But the chasing of rolling stock, rails, tools, blank ledgers, and firewood was but the avocation of these busy men, whose main work was to set wheels going. Hack lines at first floundered for miles to connect scattered fragments of the same road. The citizens of Shreveport crowded to see "the" engine move a few miles out of town.®^ Over such roads as operated, ' ' the ' ' train was the usual sign of returning life ;®^ sometimes the tri-weekly train. The magic charm to set the system going was, of course, capital, and the search for this led the presidents far afield, to return generally in disappointment. First, the bond in¬ terest must be funded to clarify the financial position. This was generally accomplished, as the bond holders were natural¬ ly interested in rapid restoration.®® The Georgia Central 43-48, 51-64. See Am. R. R. J., April, I8fi5, to April, 1866, passim. July 7, 1866. ^ The Wills Valley ran tri-weekly, Exec. Doc., 2d sess., ifOth Cong., No. 73, 12. ^ Am. R. R. J., Sept. 29, 1866, and passim for 1865 and 1866. 20 UNIVERSITY OF WISCONSIN STUDIES seems to have been the only road which could borrow at once in open market, selling between seven and eight hundred thousand dollars worth of bonds in New York.'* Private loans in Philadelphia, New York, and Baltimore netted the Virginia roads enough for absolute essentials." Some roads owned a little cotton, which was as good as cash." Meagre amounts were collected from the South itself. On the whole the South had confidence and realized the necessity of transportation. In fact, new lines were freely talked of." The terms of stock subscription to one of the most promising of these, however, reveals the barrenness of the field. The Virginia Valley pro¬ posed to raise a million dollars, calling for 2 per cent at once, 15 per cent in three years, and the remainder in ten." One is reminded of Colonel Carter of Cartersville. In fact, the two principal sources of the necessary capital were, first, the willingness of a number of northern firms, particularly those of Baltimore, St. Louis, and Louisville, to engage in bridge construction on credit," and the charging of prodigious rates ** H. Reports of Comm.. Sd sess.. 'lOth Cong., No. 3. 38. term not given. 43-48. ® The question of the amount and sources of northern capital going to the southern railroads is much more obscure than other phases of the subject. The .4me/-ican Railroad Journal continually encourages such investments and reports that they are being made, i. e.. Feb. 17. June 2. 1866; and soutiiern railroads' presidents are constantly Journeying to New York with bonds running to 8 per cent, and with attractive security features, generally preference over all previous bonds. Ibid., July 7, Aug. 4. 1866. etc. ; as early as Sept. 2. 1865, foreign investors were said to be interested in southern reconstruction : the Manhattan Bank and the National Bank of the Republic, both of New York, handled loans for southern roads, Ibid., Jan. 16. Mar. 12. 1866; such loans in 1865 and 1866 were, however. ver>* limited in number and amount. I doubt if two mil¬ lion were raised in this manner; small loans were made to various roads by the Adams Express Company whicli sought thus to receive exclusive privileges, /bid.. Dec. 8. 1866; the Crntvnl of Georgia .sold $701.000.700 of bonds, at around 15 per cent discount. If. Report of Comm., 2d. S9th, No. 34. 1011. ••The North Carolina railroad, for in.siance. reported that the damaged iron and cotton would about relay and slock it. Ibid., Nov. 3. 1866. Ibid., Oct. 27. 1866, one issue reports three extensive projects. *^Ibid.. June 2. 1866. ■•The news of such contracts is constant as well as the establishment of agency houses in the North to buy for the southern roads, I. e.. Ibid., Dec. 4. 1865. Feb. 10, 1866: the Baltimore and Ohio and other northern roads undertook to sur\ey and build for southern roads. Ibid., Dec. 8. FISH—SOUTHERN RAILROADS 21 for transportation, particularly of cotton. In fact, the cotton it had stored during the war was one of the essential features in the salvation of the South.®" Yet there must be added to these material factors that flush of high hope which is always the emotional response to peace, and the natural eon- sequence when hundreds of thousands of reunited families feel that all must be well because they are united. It would have been harder to perform the work in 1867, than it was in 1865 and 1866. By the spring of 1866, tenuous rehabilitation had taken place. The main roads boasted of splendid trains and im¬ proved sleepers.®® Portions were, indeed, well restored, but over large stretches one doubts if the sleepers performed their offlce. Yet by hook and by crook trains were able to stumble to most of the necessary points. In February, 1867, General Sheridan coming by rail from New Orleans to Washington, by Jackson, Huntsville, Chattanooga, Lynchburg, and Rich¬ mond, reported that the portions rebuilt by the military were everywhere superior to those since restored.®" On the eastern route probablj' no such generalization would be made. The military had constructed less, the Yirginia and North Carolina lines were relatively well rebuilt, aud some in Georgia; else¬ where aeroplanes, had they existed, would probably have given greater comfort and securitjL®^ Nevertheless the essen- May 5, Nov. 24, Dec. 7, 1866. As time went on, the weaker southern roads were snatched up by northern capitalists, and capital thus secured at the expense of control, Ibid., Sept. 4, Nov. 17, 1866, H. Exec. Doc., 2d sess., ^Oth Cong., No. 73, 24ff. The roads began at once to receive more than they expended, in fact, this was a necessity, and many smaller roads paid for their repairs out of the receipts on the running portion. The rates were very high, par¬ ticularly on cotton, the high price of which, and the desire of the owner for cash, obviated haggling. Exec. Doc., 2d sess., ifOth Cong., No. 73, 3-40, R. Hamill confirms this view. Am. R. R. J., Aug. 5, Sept. 1. 1866. ^ H. Reports of Comm., 2d sess., 39th Cong., No. 34, 169. ^Hamill reported at the end of 1866 the condition of 32 roads; 3. the Memphis and Charleston, the Western and Atlantic, restored in large part by the U. S., and the Central Georgia, which had not suffered severely and had the best credit, were rated excellent ; of the others, the roadbed was reported excellent on 3, good on 11. fair on 10. poor on 5 ; ties, ex¬ cellent on 2, good on 12, fair on 11, poor on 4; rails, excellent on 2. good 22 UNIVERSITY OF WISCONSIN STUDIES tial had been done, the Georgia Central and the Augusta and Southern were paying dividends on stock,'"' and some others interest on their bonds.'® The railroad system was saved, but not yet the companies. Very few indeed were able to meet the conditions of their bonds to the government. Under threat of seizure of their rolling stock, they applied for extension, generally based on the principle of twenty-four or thirty-six monthly install¬ ments. It was, of course, obvious that the original bond allowance of one year was too short ; it was based on the uni¬ versal miscalculation of unreasonably quick returns which has been the root of so much of our financial trouble. Stanton, in fact, testified that he knew it was too short, but so fixed it to be a stimulus to quick action." Mr. S. K. Hamill was sent to carefully examine the finances of the roads, and returned discriminating reports recommending grace in many cases, and pressure in others. As with Meigs' proposal, the final action was milder than that suggested by the subordinate official. In fact, all extensions were granted. If, however, this seems too great a laxity, it must be remembered that the roads were paying 7.3 per cent interest." It is not, however, surprising that this condition of affairs was not satisfactory to Congress. The roads most negligent were those of Tennessee, which were in the best condition, and which were, pregnant omen, of the President's own state. on 12, fair on 9, poor on 6 ; bridges, excellent on 1, good on 11. fair on 14, poor on 3 ; locomotives, excellent on 2, good on 13, fair on 12, poor on 2: rolling stock, excellent on 3, good on 13. fair on 11. poor on 2; 22 in all had machine shops, rated, excellent. 4 : fair, 8 ; good, 9 ; poor, 1. H. Exec. Doc., 2d 8€ss., ^Oth Cong., No. 73, 52. R. R. J., Dec. 22, 1866, the yashvUle and Chattanooga was re¬ ported to have declared a dividend secretly, not being allowed to pay one until its debt due the government was paid, H. Exec. Doc., id seaa., ^th Cong.. No. 73. 4. " Some bonds and even stocks were quoted as early as September 2. 1865 (Am. R. R. J.), Atlantic and West Point, stock 125, Georgia Cen¬ tral 100, Richmond, Frederick and Potomac, 77, Virginia Central 70. These stocks remain so stationary that it is doubtful If there were many sales: the post bellum bonds of the Georgia Central, 7 per cent, sold April 24, 1866. at 90. i^owihem Recorder. /7. Reports of Comm., 2d aesa., S91h Cong., No. 34. 272. '*n. Exec. Doc., td aesa., iOth Cong., No. 73; in the case of the Edge- viUe and Kentucky he recommended seizure. FISH—SOUTHERN RAILROADS 23 and in which he was interested as a holder of state guarantee bonds. In the case of the Nashville and Northwestern, the order granting an extension of credit was by the President himself.®'' These roads, moreover, were making offsetting claims for services rendered during the war, on the ground of the loyalty of some officials : a tangled question in that rent state."" Whisper also came to Washington of a concerted attempt on the part of the roads to secure inereased eom- pensation for their present government services, chiefly mail carrying. It was said that certain unsavory New York brokers offered to undertake the job on a high commission, part of which was to "go to Washington How far such special incentives were necessary to produce distrust of the executive in the minds of the Thirtj'-Ninth Congress may be questionable. At any rate, on December 4, 1866, a committee of five was appointed to report " the past and present relations existing between the Federal government and the railroads in the States lately in rebellion ; the amount of money expended by the United States author¬ ities in constructing, repairing, equipping, and surveying said roads ; the amount of money each road is owing to the govern¬ ment .... and they shall report what in their opinion would be the proper course to be taken by the government.""® It consisted of Horace Majmard, J. W. McClurg, Ulysses Mercur, H. D. Washburn, and J. W. Chandler, with Edward McPherson as clerk; Philetus Sau-yer later took the place of Maynard. It undertook an elaborate inquisition, during ^ H. Reports of Comm., 2d sess., S9th Cong., No. 34. 175. S". Exec. Doc., 2d sess., J/Oth Cong., No. 73, 14. etc. ; H. Reports Comm., id seas., S9th Cong., No. 34, 277 ; in the case of the Nashville and Chattan¬ ooga, however, the government could show, not that it recognized the claim, that it spent $4,079,511.33 on the road, used it in the extent of $3,134,204.92, and received $632,910.72 for private use, Ibid., 281, letter of Meigs, December 13, 1866. One of course recognizes that the citation of cents does not mean infallible accuracy. H. Reports Comm., 2d sess., ^Oth Cong., No. 3, 130. Reports Comm., id sess., 40th Cong., No. 15, on March 27, 1867, the reappointment of the committee was authorized with power to send for persons to give evidence, and on July 12, 1867, the committee was instructed to inquire into the expediency of reporting a bill declaring forfeited the land grants of 1856 in Mississippi, Alabama. Florida. Louisi¬ ana, and Arkansas. 24 UNIVERSITY OF WISCONSIN STUDIES which it brought before it everyone concerned with the rail¬ roads during and after the war, and took, with other members of Congress, a Christmas holiday junket to the South to see the actual roads."' Nearly all the railroad presidents and many of their officials appeared before it. Not many specific facts of a damaging character were brought out, but on the whole, the eastern roads made a better impression than those of the west. One eastern president actually had the temerity to .state that he had supported the Confederacy, whereas nearly all in the west claimed a loyalty, which had, in most cases, been effectuall}' concealed during the war. President John¬ son seems conclusively cleared from all charges of interested interference. The general policy which had been adopted was supported by Stanton and Thomas, but attacked by Meigs and Sheridan. The situation was, however, not one with which evidence had much to do. The main purpose which animated the com¬ mittee was the chance to take another slap at the South. Its report was .surcharged with brimstone, and hurled its fire at those who had turned $78,202,000"" into the hands of traitors. Thaddens Stevens' idea of confi.scation, however, had never won much support. The American people have usually been generous in money matters. The committee, moreover, confronted a fait accompli, which had been creat¬ ed, too, by men of undoubted loyalty. In a report signed by McClurg, Mercur, Washburn and Sawyer, it attacked the principle of repairing the roads with¬ out compensation, and stated that they should have been sold for the benefit of Union men, but it confined its recom¬ mendations to a sugge.stion that the judiciary committee be instructed to bring in a bill declaring invalid any claim by state or railroad for damage or service prior to the restora¬ tion of the road to the company, and another compelling ^ B. Reporta of Comm., id aeaa., SOth Conp., No. 34, 17. Between Dec. 13, 1866 and Feb. 28, 1867, It held, however, 28 meetings. ^ This was the estimated value of the roads, the committee made their total more impressive by adding 145,367.480. the total cost of the rail* roads to the government during the war. Ibid. FISH—SOUTHERN RAILROADS 25 immediate liquidation of indebtednessd"' On December 11, 1867, the report was tabled."® The sight of a committee of the Thirty-Ninth and Fortieth Congresses, balked of its prey, seems to have had a curious psj'chological effect upon that prej", although the withdrawal of martial law at about the same time may have been the chief cause for what followed. Up to November 27, 1867, about fortj- per cent of the indebtedness of the southern roads had been liquidated,^®' for the most part by those of the east. Then the roads simply stopped paying. Suits were ineffective. An act on March 3, 1871, allowed the secretary of war, with the attorney-general, to compromise, to protect the government against loss b}' insolvency.^®® Under this act, the Nashville and Chattanooga escaped $1,857,332.41 of debt for $1,000,000, half to be paid in ten years, and half in twenty, the whole bearing 4 per cent interest.^®® The Nash- ville and Decatur quieted $305,808.63, for $70,000, $6,000 in cash, the remainder to be paid in ten years and bear 5 per cent interest."® February 27, 1875, a new act was passed allowing settlement bj- an abatement not to exceed 25 per cent of the appraised value of the materials sold the roads. J b id H. Reports of Comm., 2d sess., ^Oth Cong., No. 3. Ibid., 12,169,456.48 had been paid in cash, 5708,569.42 in transporta¬ tion, and 5581,288.39 in carriage of mail; $4,884,500.62 was due; the origi¬ nal debt was $7,370,196.16, H. Exec. Doc., 1st sess., S9th Cong., No. 165, of which $6.503,182.98 was the amount sold on appraisal; in addition $3,403,- 412.22 had been sold for cash. Additional items, such as passengers, freight, and rent brought the total government receipts to $12,623,965.83. H. Exec. Doc., 1st sess.., S9th Cong., No. 1, report of General McCallum ; this was against a total expense of about $42,000,000. I use McCallum's figure rather than that of the committee, though the actual truth prob¬ ably lies between them. The full financial history may be followed in the annual reports of the Quartermaster-General, and particularly in the enclosures giving the reports of the Quartermaster; by June 30, 1871. 27 railroads had paid their full indebtedness, and 23 were still indebted for $4,724,350.53. Ü. S. Statutes, Sd sess., Ust Cow^r.j Oh. CIX. Report of Qua7'termaster, June 30, 1871, Table B; Report of Quarter^ master-General, Sept. 25, 1871, 202. "•/bid., 1873, 167, 187. 26 UNIVERSITY OF WISCONSIN STUDIES with the limitation that agreement must be reached within a year.'" The settlements under this act and one of March 3, 1877, reopening the case of the Western and Atlantic of Gleorgia,"* reduced the number of delinquent roads to four,"* and the situation had considerably cleared. The preposterous claims of the Tennessee roads for compensation during the period the government held them were laid to rest. The debts of the Nashville and Northwestern were written off the books, as the company became obliterated by bankruptcy and in¬ corporation of its property. The Mobile and Ohio was, how¬ ever, in an amusing position. It was named in the act of 1875 and anxious to come to an agreement under it. It had, however, paid off so much of its indebtedness that a 25 per cent abatement would put the United States in the position of debtor. This the United States ofBcials refused to permit, while the road refused to accept any smaller abatement, claiming that to do so would be to accept a penalty, where it deserved a reward for its relative promptness. Its debt, therefore, remained, with interest mounting at 7.3 per cent, until February 27, 1887, when, as a result of persistent efforts, it won its case, and Congress passed a joint resolu¬ tion"* allowing the secretary of war with the attorney-gen¬ eral to adjust its account by paying the road $150,518.12. Meantime the really good roads, which had paid their debts now a dozen years, pricked up their ears when they heard of the roads of the Tennessee region making such ad¬ vantageous terms, and lobbied for a reopening of their ac¬ counts and a refund by special act; but did not secure it. The quartermaster-general carried the three delinquent roads U. S. Statutes, Sd aeaa., iSd Cong., Ch. 108 ; this was limitad to 10 roads named in the act. U. 8. Statutes, td aeaa., Cong., Ch. 119. ^ Reporta of Quartermaater-Oeneral, Sept. 30. 1880 : thajr owed 11,068,911.72. The summary of the others was $6.552,676.49. property sold : total debt with interest and charges $8.674.742.13, payxnenU $4,860,091.85, plus $1,273.000 due under compromises; three aooounts were dropped as insolvent; $199,038.58 was restored to the Waatern and Átiantie of Geor^a as a result of the act of March 3, 1877. Report of Qxuirtenn