USA > Kentucky > History of Kentucky, Volume II > Part 53
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From the very beginning the road was a financial success. From October I, 1860, to June 30, 1861, the net earnings were $461,970.42, representing fifty-seven per cent of the gross earnings.17 And with the political uncertainties of 1861, the traffic greatly increased. For April and May of that year the freight earnings almost trebled that of the preceding month.18 Nearly all the traffic was going south, most of it having started from Louisville. The South was stocking up preparatory to war. On this point the annual report of the railroad for 1861 says: "Of the through business proper, between Louisville and Nashville, 95 per cent of the revenue was from freight received at Nashville, and only 5 per cent from that forwarded or originating at Nashville. Hence, of every one hundred cars loaded at Louisville for Nashville ninety-five were returned empty: that is, the company performed 95 per cent of the train service northward for through business, or 4772 per cent of the whole, without any compensations."19 During the war the road was, of course, subject to military control; and, indeed, it suffered much dam- age through the exigencies of warfare. After the war the company spent more than a half-million dollars in restoring and reconstructing it.20
13 H. A. Dudley, "Kentucky," Appendix in Wm. F. Switzler, Report on the Internal Commerce of the United States, 1886, 49 Cong., 2 Sess., H. R. Ex. Doc. 7, Pt. 2, 604.
14 1851-Fiftieth Anniversary of the Service of James Geddes with the Louis- ville & Nashville Railroad Co. (Proceedings of a banquet held Sept. 2, 1901, at Nashville, Tennessee), 17.
15 The Cincinnati Southern Railway, A History, edited by Chas. G. Hall (Cin- cinnati, 1902), 30.
16 Louisville Municipal Reports for the Fiscal Year Ending December 31, 1867, 8. 17 Annual Report of the President and Directors of the Louisville and Nashville
R. R. Company. Oct. 1, 1860, to June 30, 1861, 17. 18 Ibid., 18, 21.
19 Ibid., 19.
20 Annual Report of the President and Directors of the Louisville and Nash- ville R. R. Company, Oct. 1, 1860, to June 30, 1861, 20; Affairs of Southern Rail- roads, 39 Cong., 2 Sess., H. R. Doc. No. 34, 1866, 1867, 640.
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HISTORY OF KENTUCKY
Immediately after the war Louisville in connection with the Louis- ville and Nashville Railroad began anew the extension of the spur rail- ways running to the southward. In 1860 a branch had been extended so as to connect with Memphis, thus giving Louisville an all-rail route to Mobile and New Orleans.21 Numerous feeder lines had also been started along the route in Kentucky. A branch had been finished to Lebanon in 1857, the Bardstown Branch was acquired in 1865, and the Richmond Branch was opened in 1868.22 The extension of these branches was a vital problem for Louisville. Most of them ran to the east ready to tap the rich Blue Grass region with its fertile farms, and the timber and coal lands farther eastward. These extensions would bring this region more securely under the control of Louisville and prevent Cincinnati from extending her influence there. The Lebanon Branch was considered the most important. But Falls City with her excellent southern connections was still remote from the South Atlantic regions. She could reach that section only by way of Nashville, Chattanooga, and Atlanta. Further- more, to reach the Virginia seaboard, she was compelled to use the same round-about course to Chattanooga and thence along the Virginia and East Tennessee Railroad. By an extension of the Lebanon Branch across the mountains eighty-seven miles to Knoxville, this railroad would be tapped, thus greatly shortening the distance.23 Realizing the great im- portance of this extension Louisville in 1867 subscribed $1,000,000 toward its completion.24 When the road was finished to Richmond (Kentucky) in 1868 an excursion of 200 people from Louisville travelled over the road to that place where a great reception was held, with festivities last- ing over two days.25 This movement was hailed in Central Kentucky as affording the long hoped-for outlet for its products.
By 1866 Louisville by means of the Louisville and Nashville Railroad had excellent connections with the South in general. Albert Fink, the general superintendent of the road, speaking of Louisville's excellent con- nections said: "With a direct through line to Memphis, reaching by connecting lines into Arkansas and the far Southwest, and commanding the travel and trade of the lower Mississippi and closely connected by railroad with New Orleans, with the shortest connection with Mont- gomery, Mobile and Pensacola, by way of Nashville and Decatur, with uninterrupted rail connections with Atlanta, Savannah, Charleston and Norfolk, Louisville would certainly be in a condition to obtain a large share of the trade of the South; and this, in connection with the large local business that must flow into the city from all sections of the State traversed by her roads, will make her ere long one of the most impor- tant commercial and manufacturing cities of the Union."26 Louisville was anxious for these connections to be extended and consolidated. The
21 Joseph Nimmo, Jr., Report on the Internal Commerce of the United States, 1881, Appendix 6, 169, 170.
22 H. A. Dudley, "Kentucky," Appendix in Wm. F. Switzler, Report on the Internal Commerce of the United States, 1886, 607; Merchants' Magazine and Commercial Review (Hunt's), 1867, Vol. 46, 329.
23 Affairs of Southern Railroads, 642, 643; Cincinnati Daily Gazette, Nov. 16, 1866; Cincinnati Commercial, June 19, 1867.
24 Ibid., Nov. 19, 1868; Lewis Collins, Collins' Historical Sketches of Kentucky. History of Kentucky to 1874 (Covington, 1874), Vol. 1, 176.
25 Cincinnati Commercial, Aug. 3, passim., 1867.
26 "Report of Albert Fink, General Superintendent," July 1, 1866, in Affairs of Southern Railways, 644. Louisville secured the following connections as indi- cated : Jeffersonville Railroad and the Madison and Indianapolis Railroad opened in 1847; Ohio and Mississippi, 1857; Louisville and Nashville Railroad, 1859; Louisville, Cincinnati and Lexington, 1869; Louisville Padncah and Southwestern, 1874; to Atlantic Ocean by the completion of the Steubenville and Indiana Railroad, 1858; and to most southern points by the completion of the Louisville and Nash- ville in 1859. Joseph Nimmo, Jr., First Annual Report on the Internal Commerce of the United States, 1876. Answers by C. H. Pope.
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HISTORY OF KENTUCKY
City Council in 1871 voted $375,000 to aid the Louisville and Nashville Railroad in procuring the Nashville and Decatur Road, for fear that Cincinnati would acquire it and use it against her interests.27 Cincinnati was conscious that her greatest rival was expeding every effort to com- plete her southern connections. The Railroad Record said, "In the meanwhile, Louisville, which in no way can rival Cincinnati if Cincinnati puts forth its strength, has wisely, and with great sagacity, put forth her energies, and got the Kentucky Legislature to do the same, in making her communication directly with the entire South."28
Louisville was not content with having better connections with the South than any other Ohio Valley city; she hoped to be the center for roads in all directions. She was largely actuated in her rail activities in other regions by the desire to check-mate Cincinnati. She intended first to make her position as secure as possible in Kentucky. Any railroad project that would give her better connections with the Blue Grass region, which lay south of Cincinnati and was largely tributary to that city, was given a careful hearing. Shelby wanted better railway connections with Louisville. The county voted $300,000 for such a railroad, and the Shelby Sentinel hoping to secure aid from the Falls City began to prepare the way: "We feel the deepest interest in the prosperity of the city, we are proud of her; and while some portions of the State seem disposed to harass her with hostile legislation, in Shelby she has a firm friend and ally."29 A proposal immediately went up from Louisville to vote a sub- scription of $100,000.30 She also had many other projects of this kind in mind. In 1870 the City Council and the Board of Trade made a trip to Frankfort to encourage the construction of a railroad from that place to Paris. 31 She was also sending out her tentacles to the West. In 1869 she voted $1,000,000 to the Elizabethtown and Paducah Railroad.32 She was also keeping in mind the construction of a railway eastward to connect with the Atlantic seaboard at Norfolk. As previously noted, the extension of the Lebanon Branch of the Louisville and Nashville Road, was one of her pet schemes. Other companies independent of the Louis- ville and Nashville also kept the project in the foreground.33 But the ambitious Falls City was not content to let all her connections lie south of the Ohio River. The Courier-Journal urged the construction of a road to Vincennes as "The trade from this region of country, what there is of it, now goes to Cincinnati, and the proposed road would not only divert it to this city, but would develop a large business which now only exists in a latent state."34 By the end of 1868 Louisville had succeeded in establishing through car service to New York, a very important addi- tion to her northern connections. The Western Railroad Gazette re- marked, "The new line will be of very great importance to Louisville,
27 Cincinnati Commercial, April 22, 24, 1871. A news dispatch from Nashville said, "Louisville is making a strong effort to secure a lease on the road to Decatur. . .. It will require prompt action on the part of Cincinnati to prevent it." Ibid. April 13, 1871.
28 Quoted Ibid., Nov. 17, 1868.
29 Cincinnati Commercial, May 22, 1869.
30 Ibid., July 9, 1869.
31 Ibid., Ang. 19, 1870. This is a typical beginning for a Board of Trade resolu- tion : "Whereas, we deem it a duty to the commercial interests of our city and State to secure all outlets and inlets to commerce and trade, as well as to aid, with whatever means we have, in establishing facilities of communication with all sections either to the ocean or to the gulf. . . . 32 Collins, History of Kentucky, Vol. 1, 189. Ibid., June 11, 1868.
33 Cincinnati Commercial, Jan. 9, 1869; May 12, 1871; De Bow's Review, New Series, Vol. III, 1867, 292, 295.
34 Merchants' Magasine and Commercial Review (Hunt's), Vol. 56, 1867, 330; Cincinnati Commercial, Nov. 18, 1868.
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which has more complete connections than any other southern city, and needs a line to New York as a feeder to these lines." 35
Louisville was willing to make any connections either by water or by rail that would secure a market ; and especially was she desirous of keep- ing Cincinnati out of the rich central Kentucky farming region, and, in- deed, the mineral lands of the eastern mountains. Her contemplated aid toward improvements in the Kentucky River brought this editorial com- ment from the Cincinnati Commercial: "If we do nothing, Louisville will probably secure such an interest in the company as will enable her to discriminate against us, and secure a trade we cannot well afford to lose." It, furthermore believed that this project if duly aided by Cincin- nati would "establish a lasting competition with the railroad monopolies now controlling Kentucky commerce at extravagant charges." 36
Louisville was, thus, very liberal in her subscriptions to railways, especially when there was any possibility of their helping her. The fame of her generosity spread. Not only delegations from Kentucky sought her aid; but Tennessee commissions came asking subscriptions.37 As a direct result of her liberality, she found herself most excellently con- nected with Kentucky and the rest of the South. In 1876 she had direct access by railroad to seventy-five counties and by water to thirty-three more "thus making 108 out of 117 counties of the State subsidiary to her commerce." 38 But for these conveniences she had paid $8,190,000.39 In time opposition to this lavish use of the city's credit began to spring up from many of the city's larger property holders, who were bearing much of the burden of taxation.40 The mayor in his annual message of January, 1871, called a halt : "We should be very cautious about bur- dening ourselves any further with taxes in aid of railroad enterprises. * *
* Unless we see a pressing necessity for building a road in order to prevent our trade being diverted to other channels or unless it is to open up a section that has no good outlet, and whose trade we can thereby secure, we should look for unaided private capital to build new roads."41 The indebtedness of the city at that time was about five million dollars. 42
With these connections all tending to center in Louisville, she came to hold the commerce of Kentucky at her mercy. She also held a strategic position in competing with her rivals in the Southern trade. The Louis- ville and Nashville Road was the secret of the city's excellent position in all lines of traffic. City and railroad worked together for each others interests. The prosperity of one was the prosperity of the other. The president of the Louisville board of trade, in referring to this identity of interests, said: "That road has been properly termed 'Louisville's great- est adjunct' * * With pride I have watched its success and the accommodating spirit with which it has extended branches, like arms, in different directions, to bring new trade from new districts to Louisville -its foster-mother-to repay her for her nursing care and saving help, when the road was struggling for existence." 43
35 Western Railroad Gazette (Chicago), A. N. Kellogg, editor and proprietor, Dec. 19, 1868.
36 Cincinnati Commercial, Aug. 25, 1869.
37 A Tennessee delegation came up from Gallatin wanting aid in building a railroad from Lebanon, Kentucky, to Gallatin, Ibid., Ang. 29, 1867.
38 Centennial Report of the Business of Louisville, Ky., the Cities of New Albany and Jeffersonville, Ind., and the Mineral and Agricultural Resources of the State of Kentucky (Louisville, 1876), compiled by A. Hogeland, 6; Scribner's Monthly, Vol. 9, December, 1874, 139.
39 Renben T. Durett, "The Centenary of Louisville," in Filson Club Publications (Louisville, 1893), No. 8, 110.
40 Cincinnati Commercial, Jan. 13, 1868.
41 Louisville Municipal Reports for the Fiscal Year Ending December 31, 1870 (Louisville, 1871), 17.
42 Cincinnati Commercial, Jan. 11, 1871.
43 Ibid., May 22, 1869.
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With this perfect harmony between the two, and with the mutual advantages each was receiving from the other, the road entered upon a period of wonderful prosperity. From 1865 to 1870 the road more than doubled the number of its freight cars, and still it was unable to haul the freight offered.44 The fiscal year ending June 30, 1865, saw the re-adjustments of the railroad to peace conditions. During the first six months of this year, the receipts were almost two million dollars; but during the last half of the year the receipts dropped more than a million dollars. This was due of course, to the loss of the large business inci- dent to fighting the war in the South.45 But the receipts for the follow- ing year were still much higher than they had been at the beginning of the war. There was an increase of 182 per cent in freight receipts, 103 per cent in local passenger and 400 per cent in through passenger receipts over the year ending in 1861.46
There is no better index into the business conditions of Louisville than a further examination into the earnings and dividends of this railroad. The net earnings had increased from $75,000 in 1858 to $1,142,000 in 1870.47 Up to 1868 the capital stock was only $5,000,000. At that time an increase of $5,000,000 in capitalization was granted by the Legislature. But even with this increase the actual cost of the property was over thir- teen million dollars. 48 In this year a 40 per cent dividend was declared. Still, during the period following, "by the construction of new and the acquisition of other lines, the value of the railroad property and its capac- ity to earn had increased out of all proportion to its stock debt."49 The high water mark was reached in 1880 when a 100 per cent dividend was declared.
With such prosperity the railroad felt no duty to conciliate or grant favors to anyone outside of Louisville. On account of this attitude much opposition grew up against this all-absorbing corporation that held the outlets of the state in its grasp. Central Kentucky which was none too well served in her connections with this railroad, found much to criticise in these huge profits. A Lebanon citizen claimed that the "Louisville and Nashville Railroad make us pay just what they please, and we are bound to submit to it. They run to their own time, and have their own way, and we have to submit; and how much this Louisville and Nashville Railroad has made! I do not think I could make any man believe in the enormous profits of that road, for they are truly fabulous.
The gentleman has been in this city who owns stock for which he paid the trifling sum of $200, that today is worth $5,000 paying him six percent all the time." 50
Although the Louisville and Nashville Railroad was yearly granting better rates, there grew up bitter opposition. The rate per ton mile was reduced from 5.37 cents in 1865 to 3.01 cents in 1870.51 But the average
44 H. V. Poor, Manual of the Railroads of the United States, 1871, 1872, 122, 123, 216. In 1865 the freight cars numbered 524; in 1870 they numbered 1,177. The tonnage in the latter year was 438,413. The total number of cars was 1,264. Census 1880, Transportation, 252.
45 Annual Report of the President and Directors of the Louisville and Nash- ville Railroad Company, July 1, 1865, to June 3, 1866, 6. 46 Affairs of Southern Railroads, 629, 631, 634.
47 1851-Fiftieth Anniversary of Services of James Geddes, 37.
48 Ibid., 18, 19. Instead of including all net profits in dividends, much was often expended in bettering the condition of the road.
49 1851-Fiftieth Anniversary of Services of James Geddes, 19. In 1880 the cost of the Louisville and Nashville road had reached $18,585,135, representing $9,- 520,135 in excess of the outstanding stock. This is very striking when compared to the excesses in the other direction later, when the "watered stock" practices began.
50 Cincinnati Commercial, May 9, 1869.
51 1851-Fiftieth Anniversary of Services of James Geddes, 38.
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HISTORY OF KENTUCKY
man was not pacified by such reductions when he saw what seemed to him to be gross inequalities. He knew nothing about rate making; through freight rates and way freight rates meant the same to him. Dis- criminating rate to points enjoying the competition of other railroads, while more excusable still appeared to him to be grossly unjust. There is little doubt but that the Louisville and Nashville became unduly tyran- nical where there was no competition. A Kentucky representative de- nouncing the road for its discriminations, charged that a farmer of Bar- ren County sent ten hogsheads of tobacco to Louisville, paying a rate of 35 cents the 100 pounds. The same tobacco was purchased by a New Orleans buyer, and the same rate was granted to New Orleans.52 A com- plaining farmer, said, "We cannot devote our time and means to raising stock and tobacco and then give all the profits to wagons and the Louis- ville and Nashville Railroad to carry it to market for us."53
Central Kentucky, especially the Blue Grass region, was thoroughly aroused over conditions. There was no outlet to the southward except by way of Louisville over the Louisville and Nashville Road. Adequate provision was not made for the transportation of live stock from this region to the important southern markets. These people believed they were contributing to Louisville's prosperity without just returns. A dis- contented Kentuckian wrote, "Our mules, hogs, bagging, fine cattle, horses, agricultural implements, flour and bacon are all taxed by Louis- ville in their transit through her. Her warehouses and commission mer- chants, their transfer lines, omnibuses and drays, drivers, her laboring poor and well-fed rick, all nibble at our cheese." 54 It was in central Kentucky especially that the Louisville and Nashville Road had occasion to grant special rates to certain points having other outlets. The Ken- tucky Central Railroad ran down from Cincinnati into this region and tended to bind it to that city. In order to counteract this influence the Louisville and Nashville Road offered better rates to Stanford and Rich- mond, which came under the grasp of the Kentucky Central, than to points nearer to Louisville, having connections only with that city.55
Kentucky communities were not alone in their indictment of what they called the "nefarious rate-makings" of the Louisville and Nashville Rail- road. Cincinnati was one of the most interested of all, as this road was her chief highway to the South. As it was to Louisville's interests to keep Cin- cinnati out of the southern markets, she made certain that the Louisville and Nashville Road would grant no favors in rates to that city. The Cincinnati rates were made by adding the Cincinnati-Louisville River rate to the rate from Louisville to the final destination. This, of course, always placed a handicap on Cincinnati of the river rate to Louisville. Or as it often happened in actual practice, "the rate between Cincinnati and competing points was made by adding an arbitrary rate between Cincinnati and Louisville to the rate from Louisville to such points." 56 These rates placed Cincinnati in a very unequal position in any competi- tion with Louisville, who received all the blame as the instigator of these rates. The Cincinnati Commercial said of this combination of city and railroad, "The Louisville and Nashville Railroad is run in the interest of Louisville, and that it is the determination of its managers to perpetuate
that policy, there can be but little doubt. * * * If Louisville is to exact tribute from all Kentucky in this way, the State might as well be
52 Cincinnati Commercial, May 9, 1869.
53 Ibid., Jan. 14, 1871.
54 Cincinnati Semi-Weekly Gazette, March 11, 1870.
55 Cincinnati Commercial, May 22, 1869. It was claimed that Lebanon had to pay for car-load lots to Louisville $34; while Stanford and Richmond, which were farther away, paid only $28.
56 Joseph Nimmo, Jr., Report on the Internal Commerce of the United States, 1881. 90; The Cincinnati Southern Railway, A History, edited by Chas. G. Hall, 31.
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HISTORY OF KENTUCKY
fenced in and let the commerce of the rest of the world pass around it." 57 It was common knowledge to Cincinnati that "her freights were delayed, the rates furnished unsatisfactory, and the facilities supplied in- adequate." 58 It was testified before the Cullom Committee investigating interstate commerce that there were gross discriminations in favor of Louisville as against all other places.59 The railroad was described by one who had doubtless suffered at its hands as follows: "* * * Opu-
lent and powerful from high rates of transportation and a virtual monop- oly of trader southward *
* impoverishing the farmers along its route by failing to provide the means of transportation for their grain crops at such prices as will compensate them to send their crops to market ; subsidizing by favors, after the Erie fashion, prominent and less prominent members of the Legislature, the Louisville and Nashville Rail- road Company, with that soulless characteristic that attaches to most corporations, is prepared to exact its gigantic powers to the injury, not only of Cincinnati, but of a very large section of Kentucky." 60
Louisville was not oblivious to the bitter enmity she was stirring up within the state. She cared nothing for the hostility of Cincinnati; but she could not afford to lose Central Kentucky. The Louisville and Nash- ville Road had gone so far in its discriminations in rate-makings that it began to alarm even Louisville. The president of the board of trade warned the road not to stir up further enmity, and counseled lower rates and a conciliatory attitude. "Further evidence of this hostility," he said, "is exhibited in the almost spontaneous movement of the people, in favor of building new roads, the completion of which will be far more detri- mental to the interests of the Louisville and Nashville Railroad than would be any concession in the way of reduction of freight, as a matter of policy, sufficient to conciliate the disaffected." 61 The road not only did not succeed in alleviating the discontent; but it even managed to stir up opposition within Louisville itself. A considerable faction there thought that the road was not charging high rates in order to help the Louisville merchants, but that this was incidental to that road's desire to make money. So Louisville soon began to fear that this incidental advan- tage was overbalanced by the bitter hostility that was being stirred up throughout the state.62
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