USA > Kentucky > History of Kentucky, Volume II > Part 61
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48 Ibid., Oct. 27, 1871.
49 Annual Reports of City Department of the City of Cincinnati for the Year Ending February 28, 1871, 18, 19.
50 Annual Reports of the City Departments of the City of Cincinnati for the Year Ending February 28, 1870, 7.
51 Cincinnati Commercial. Feb. 23, 1871.
52 Quoted in Cincinnati Semi-Weekly Gazette, July 4, 1871.
53 Cincinnati Commercial. Feb. 23, May 4, 5, 14, June 13, passim, 1871.
54 Cincinnati Commercial, May 17, June 19, 1871; Cincinnati Semi-Weekly Gazette, May 9, July 18. Aug. 1, 1871.
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election that followed, the democrats carried the state as usual and by their usual large majority. The Central Kentuckians had not yet come to the point where they could change their politics for the road, espe- cially when it appeared they would likely win more quickly without it. They, of course, elected only those democrats who favored the road, so it would have been blind folly to have voted the republicans with the expectation of thereby gaining anything.
The Legislature met in early December, with James B. McCreary as Speaker of the House. The election of McCreary was a victory for the friends of the road, as he had come out fully in favor of the south- ern connection.55 An entirely different fight was made this time. One of the complaints that had been made by the Kentucky friends of the road, was that Cincinnati was always too much in evidence at Frank- fort. The Lexington Press believed that it was due to this lack of tact on the part of Cincinnatians that the bill had been defeated twice be- fore. It threw out the hint that "Kentucky legislators are not, as a rule, to be either bought or bullied into measures." 56 The desire was now generally expressed by Kentuckians that Cincinnati keep out of the fight. They believed that by making it a "Kentucky fight," they would arouse less opposition and prejudice and would make final success more certain. The trustees were constrained to share these views and so agreed to leave everything to the Kentuckians.57
The bill was early introduced, and the fight began over again. The opponents of the road were as obstinate as ever. They resorted to every known tactic to delay and obstruct. The ayes and nays were demanded on almost every vote taken on any point relative to the bill.58 Again, a large number of amendments introduced with different mo- tives were offered, many of them being finally adopted. The friends of the bill introduced some of them to win support from those who were in favor of the road, if Kentucky interests were sufficiently safe- guarded. The opponents introduced others to nullify the bill or make it so objectionable that its friends would reject it. A test vote was reached in the House on January 13, 1872, resulting in the passage of the bill by a decisive vote-59 to 38.59 A hard fight now lay in the Senate. This body had not been completely subjected to popular opinion in the last election, as only one-half of its membership was chosen at any one election. As it was known that the vote would be very close in that body, the stage was set for a bitter fight. On the 27th of Janu- ary the Senate announced itself ready for a vote. Strong pressure had been brought to bear upon certain senators, among whom was Senator Gilbert. Long a bitter opponent of the bill, he now reversed his posi- tion far enough to promise not to vote at all, if the Senate would excuse him; but if it refused, then, he would vote for the bill. This was a clever way to at least escape voting on the losing side, and if his vote were cast at all to be on the winning side. So in the vote that followed, he asked to be excused when his name was reached. His case was passed for the time being and the vote was continued resulting in a
55 Ibid., Dec. 8.
56 Cincinnati Semi-Weekly Gazette, Oct. 20, 1871; Cincinnati Commercial, Sept. 29, 1870.
57 Ferguson, Founding of the Cincinnati Southern Railway, 37.
58 Journal of the Regular Session of the Senate of the Commonwealth of Kentucky (Dec. 4, 1871-March 29, 1872), passim. Journal of the Regular Session of the House of Representatives of the Commonwealth of Kentucky (Dec. 4, 1871-March 29, 1872), passim.
59 Journal of the Regular Session of the House of Representatives of the Com- monwealth of Kentucky (Dec. 4, 1871-March 29, 1872), passim, 239; Cincinnati Semi-Weekly Gasette, Jan. 16, 1872. Most of the objectionable amendments were added in the Senate after the bill had passed the House. Collins, History of Kentucky, Vol. I, 224.
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defeat for the bill, 19 to 18. If this vote stood, the bill was, of course, lost. The question now came up of excusing Gilbert. Nothing would now please the opponents better than to do this. They were on the verge of so doing when the question was raised as to whether a two- thirds majority were not necessary. The rules were silent on this point ; and so in order to avoid further complications, Gilbert suddenly an- nounced his vote in favor of the bill. This made the vote a tie- 19 to 19. But victory was now assured, for John G. Carlisle, who had been given the nomination of lieutenant-governor to appease Central Kentucky, was president of the Senate. He, of course, cast the decid- ing vote for the bill, which was thus passed 20 to 19.60
In the meantime the congressional club had not been laid aside in- definitely. The Cincinnati Southern bill was called up in the United States Senate on January 15 (1872), as a threat against the Kentucky Senate.61 But now with the road victorious in Kentucky, the whole subject was dropped with the statement and veiled threat of Sherman that "as the State of Kentucky has since passed a law on that subject, I suppose this bill had better be laid aside for the present * * *"62
The wildest enthusiasm greeted this victory in Central Kentucky ; a corresponding dejection reigned in Louisville. A news dispatch says, "A worse defeat on the one side, and a greater victory on the other, never occurred in the Kentucky Legislature. The enthusiasm of the people in Central Kentucky would hardly have been greater if the pas- sage of the bill had been for the immediate pecuniary benefit of each and every individual." 63 A dispatch from Lexington said, "There is great rejoicing in this city over the passage of the Southern Railroad bill in the senate today, and cannon have been thundering away in the Court House yard for two hours." 64 A special dispatch from Dan- ville said, "There is great rejoicing here over the passage of the rail- road bill. The town is illuminated, cannon firing, and everybody hap- py." 65 Cincinnati received the news in quite a different vein. To those who looked deeper the victory seemed to be barren. The editor of the Cincinnati Semi-Weekly Gazette said, "The Cincinnati Southern Rail- road bill, as it has passed the Senate of Kentucky, contains illegal pro- visions discreditable to the character of the State, which the General Assembly, for the sake of the good name of the Commonwealth, should make haste to amend." 66
The opponents of the road had, in truth, succeeded in almost nul- lifying the effect of the bill as originally introduced. There was placed in the preamble the requirement that Cincinnati should report the lines surveyed to its citizens and let them choose the route to be followed. This was designed to create confusion as the route had already been selected. Kentucky had been actuated in part by a genuine fear that a foreign corporation might be seeking to enter the state in the shape of the Cincinnati Southern Railroad, striving to obtain rights which would almost destroy the power of the state over it. The Legislature intended to leave no loop hole for such a corporation in any of the provisions of this bill. There had long been a general law in Kentucky, providing that all charters granted by the Legislature should be sub- ject to change or repeal. This idea was sufficiently expressed in the
60 Cincinnati Semi-Weekly Gazette, Jan. 30, 1872; Journal of the Regular Session of the Senate of the Commonwealth of Kentucky (Dec. 4, 1871-March 29, 1872), 822-824, passim.
61 Congressional Globe, Part I, 42 Cong., 2 Sess. (1871-1872), 380.
62 Ibid., Part 3, 42 Cong., 2 Sess., 1950.
63 Cincinnati Semi-Weekly Gazette, Feb. 2, 1872.
64 Cincinnati Semi-Weekly Gazette, Jan. 30, 1872. 65 Ibid.
66 Ibid.
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Cincinnati Southern Railroad bill. It began in the preamble with the clause reserving "the right to change, alter, or modify this act" and ended by asserting "the right to alter, amend, or repeal this act." 67 One of the conditions upon which the trustees were to construct the road was that "they thereby waive the right to remove any case from any of the courts of this State, to any of the courts of the United States or to bring a suit in any of the courts of the United States against any citizen of this State; and a violation of this condition shall operate as a forfeiture of the rights, privileges, and immunities granted in this act." 68 In order to make assurance doubly sure and to provide this same prohibition against all foreign corporations operating in Kentucky, the same Legislature after passing this railroad bill, enacted a general law against foreign corporation removing suits from Kentucky courts to Federal courts. The penalty for disobedience was a forfeiture of the charter, a fine of not less than $50 a day as long as the law was not obeyed, and not less than one week's imprisonment-either or both of the latter two penalties to be imposed at the discretion of the petit jury.69
But this bill had been principally opposed because Louisville wished to keep Cincinnati out of the southern trade. In order to offset any advantage Cincinnati might have in the Southern markets because of this more direct connection, a provision was inserted which forced the railway to pay to the State of Kentucky I cent on every hundred pounds of freight going through the state, 50 cents for every through passenger, and 25 cents for every passenger of 100 miles or more.70 The state furthermore asserted control over through freight by prohibiting "un- just discriminations in favor of through freights or passengers against any way freight or passengers, or against freights or passengers from other railroads connecting with said railway in this State *
* *" 71 Of this tax, the Cincinnati Semi-Weekly Gasette said, "The provision levying a special and invidious tax upon the through passengers and freight of this road, assumes that Kentucky is a foreign State, and not only this, but that she is an organization of Bedouin Arabs to levy tribute upon trade passing through their miserable country." 72 Of Kentucky's zeal in safeguarding her interests in this bill the Cincinnati Daily Gasetle said, "For our part, we are utterly opposed to forcing upon the people of Kentucky an expenditure of ten millions of Cin- cinnati money to build a railroad in that state under conditions that treat it as a hostile project." 73 As the bill passed the Kentucky Legis- lature Cincinnati was virtually shorn of all the advantages she had hoped to secure in building the railroad. Her through connection with the South was almost nullified by the high tax on long distance freight and the prohibition against charging a higher rate for short hauls than for long hauls. But in subsequent legislatures the worst rigors of the orig- inal law were removed.74
An account of the construction of the Cincinnati Southern is an-
67 Acts of the General Assembly of the Commonwealth of Kentucky. Passed at the Regular Session of the General Assembly, which was Begun and Held in the City of Frankfort on Monday, the Fourth Day of December, 1871, 23-32.
68 Section 15, in Ibid.
69 Ibid, 39-41.
70 Section 14.
71 Section 16.
72 Jan. 30, 1872.
73 Quoted in Boyden, Beginnings of the Cincinnati Southern Railway-A Sketch of the Years, 1869-1878, 23.
74 The passenger tax, together with the provision requiring the citizens of Cincinnati to vote on the route, was repealed on March 25, 1872. Acts of Kentucky ... of the General Assembly . . . . Began and Held . ... the Fourth Day of December, 1871. 60, 61. The freight tax was repealed on February 4, 1873. Ibid., 5.
Vol. II-27
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other story. Only a few general facts as to the results of this new highway to the South need be given here. It was begun in 1873 and was opened for traffic to Chattanooga on March 8, 1880.75 It cost almost three times as much as Cincinnati had contemplated ($28,000,000 had been spent up to July 1, 1881). Had the real cost been known and published in the beginning, the road would never have been built- at least not by the City of Cincinnati. The municipality immediately upon the road's completion leased it for an annual rental. It has never been a marked financial success; but it has fulfilled many of the com- mercial expectations that Cincinnati had held in such a highway. The freight receipts for the first year of operation were $1,062,410.61, with the local traffic paying more than twice as much as the through trade. More freight was offered in Cincinnati than could be hauled. The com- pletion of this connection greatly reduced freight rates to the South. Some of the reductions were as follows: To and from South Atlantic ports, 9.4 per cent ; Chattanooga, 20 per cent ; Georgia, 14 per cent ; South Carolina and North Carolina, 13 per cent; and regions west of the Louisville and Nashville Railroad, 5.7 per cent.
Thus many of Louisville's worst fears were realized. She lost vir- tually all the trade of Central Kentucky. The local trade of the Blue Grass region went to Cincinnati, and the trade of all Central Kentucky with the South, which had formerly gone through Louisville, now went directly over the Cincinnati Southern Railway. Louisville thus found her position being gradually undermined on the east by this latest con- nection of Cincinnati's and on the west by the activities of St. Louis. She now became more lavish than ever in her hospitality to Southern merchants and business men, and she began to ponder over new railway projects.76 But a discussion of these activities and of the commercial movement and tendencies that followed belongs to another story.
Before the Civil war the peculiar aspect of commerce in the Missis- sippi Valley had been the exit through the South of the export trade and a mutual exchange of products between the northern and southern parts in the intra-valley trade. But certain movements had by the begin- ning of the conflict transferred almost completely the outlet of the great interior commerce from New Orleans and other Southern ports to the East. The dreams of Calhoun to drain the commerce of every descrip- tion to the southward had gone glimmering in the construction of the trunk lines that lead to New York City and to other Eastern ports. The Civil war made the revolution more certain and permanent. But even after the war, the South made an abortive effort to use the Mississippi River again as an outlet for the whole valley. The course of the intra- Valley trade was not affected by the war, except in its methods and in its means of transportation. The North still used southern products, and the South continued to use northern products. The mutual dependency of these regions could not be destroyed. The extremities to which traders went during the war to get southern products, shows that economic laws and natural commercial movements could be ill restrained by military rules and treasury regulations. The changes, then, that came in this
75 For a general account of this railroad and its commerce up to July 1, 1881, see Joseph Nimmo, Jr., Report on the Internal Commerce of the United States. (Submitted July 1, 1881), H. R. Ex. Doc. 7, Part 2, 46 Cong., 3 Sess. A popular account of the Cincinnati Southern brought down to 1902 is contained in The Cincinnati Southern Railway-A History, edited by Chas. G. Hall.
76 She spent $7379.93 in entertaining a group of Southern Excursionists in 1872. The items in the total cost were as follows: Distributing invitations, $100; one-half expense for a lunch, $437.50; wine, $204; transportation in city, $315.50; banquet at Galt House, $3659.50 ; music, $75; wine and lunch, $440; cigars, $121.88; badges, $585.30; lunch, $1442.25. This money was sent by the municipality. Louisville Municipal Reports for the Fiscal Year Ending December 31st, 1872, 236, 237.
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intra-valley commerce after the war were not changes in directions but merely changes in means and methods. This decade saw a complete break in the old order that had obtained before the war. The ante- bellum economic system of the South had vanished. Readjustments had come. A striking expression of this revolution appeared in the shifting of transportation from the rivers to the railways. It was in this respect that the position of Kentucky and Louisville became extremely important for the Ohio Valley region.
Kentucky's situation was most favorable for either river or railway traffic. The Kentuckian may be pardoned for over-enthusiasm when he exclaimed, "And right here, in the very center of the Mississippi Valley, lying like a crouching lion, stretched east and west, is Kentucky, the thoroughfare of the continent." And of all the points in the state, the position of Louisville was most strategic. Built at the falls in the Ohio River, she controlled the break in the traffic there and profited from the difficulties of others. The Courier-Journal, appreciating the natural advantages of Louisville, especially in comparison with Cincinnati, said : "The difference between Cincinnati and Louisville is just the difference between the being of nature and the creation of artifice. God Almighty has given all the advantages of location to Louisville, and man almighty is striving, by artifice, to avert the decrees of providence." But Louis- ville's favorable position was not wholly due to nature. By the com- pletion of the Louisville and Nashville Railroad in 1859 she had built better than she knew; with the decline in value of river transportation, the railroad became all important. But the only railway in the Ohio Valley to the South was the one which Louisville largely built and now controlled. She had also centered the railway system of the whole state in herself. She was now prepared to hold the field against all com- petitors. With many ingenious methods she blocked her great rival until the latter was forced to resort to most remarkable means. The fight for a direct independent connection with the South began; the Cincinnati Southern Railway finally resulted. The struggle between the two cities for the Southern prize was unique in the annals of America. The in- genuity resorted to by the rivals would be hard to parallel; but the result was the break-up of one of the most complete monopolies due to posi- tion ever enjoyed by an American city.
KENTUCKY STATE CAPITOL
CHAPTER LXVI
RECENT STATE HISTORY
The history of Kentucky since the issues growing out of the Civil war ceased to play a predominant part has tended to merge more and more into that of the nation as a whole, so that in order to understand the state of today a knowledge of the nation itself is necessary. Here the broader lines of national development must be left to the general history, and only those affairs of a more restricted nature and of par- ticular interest and importance to the state alone can be dealt with. Although Kentucky had never been a part of the Southern Confederacy and although it was never forced through the mill of reconstruction, still its problems were much the same as the other Southern states and its recovery from the effects of the war was to be as long deferred.
The blighting panic of 1873 came at the very outset of the state's attempt to pull itself up to a higher plane of economic development, and, although the effects of hard times were slight, indeed, on the banks of the state, due to their proverbial strength and soundness, still the ordi- nary individual was visited by hard and trying times.1 Cheap money, the delight of the debtor, could best be had by coining and printing more money, and so the debtor character of the state asserted itself in demanding more greenbacks and the free coining of silver, which had been discontinued in 1873. In 1878 the Legislature demanded the repeal of the Federal law making greenbacks redeeinable after January I, 1879, in specie, and called upon Congress to make "silver the equal of gold, as far as paying private and public dues." 2 Grangerism, the rising of the Middle Western farmers, soon entered Kentucky. Hard times were too constantly with the tillers of the soil; they would know the reason and provide the remedy. The Grange, an organization first started for social and benevolent purposes, was at hand; they would use it for political purposes as well. The hard lot of the ordinary cit- izen, so forcefully emphasized by the panic of 1873, refused to be routed. The prices of farm products were low and continued downward. In 1874 a Kentuckian said: "For the last three years the decline in the products of our farmers has been such as to dishearten and disappoint the very bone and sinew of our country ; lands-Blue Grass lands-the best on God's green earth, have, owing to the stringent contraction, declined in value by at least a third." 3 The Grangers were soon giv- ing the dominant democratic party much worry. W. B. Machen wrote John W. Stevenson in 1874 that he was anxious to have the party plat- form written with the problem of the Grangers in view. He said: "I shall not be easy about that until it is spread out, as I know there is not perfect accord in the party and Grangerism is diffusing its peculiar notions into all associations of the commonwealth." 4
1 See Duke, History of the Bank of Kentucky, 121, 122.
2 Acts of Kentucky, 1877, I, 165, 166.
3 Stevenson MSS., Vol. 31, No. 31,943. This is the MS. correspondence to and from John W. Stevenson and other members of the Stevenson family. It is in the Library of Congress at Washington.
4 Stevenson MSS., Vol. 31, Nos. 32,062, 32,063. Letter dated December 10, 1874.
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The other periodic panics and depressions visited the state and had in general similar effects, but in every instance the Kentucky banks main- tained their extraordinary record of strength and ability to weather storms. In the panic of 1893 only seven failed from January to Sep- tember, and for October banks outside of Louisville showed a 261/2 per cent reserve, while the legal requirement was only 15 per cent.5 The distillery business was hit particularly hard a few years later, when all of the 300 establishments except six closed down. The main causes were attributed to the depressed market and to the increase of the rev- enue tax from 90 cents the gallon to $1.10.6
The financial strength of the state, so vividly shown in the stand- ing of the banks, extended with equal force to the state government itself. In 1873 the commissioners of the Sinking Fund (money set apart to meet the state's bonded indebtedness) were directed "to invest so much of the means at their command, and under their control, in five-twenty gold-bearing interest bonds of the United States, as may be amply and fully sufficient to redeem the whole amount of the re- deemable bonded indebtedness of the state, with the interest thereon, not exceeding $1,000,000 in amount and not less than $350,000." 7 The next year the finances of the state were reported to be in an excellent condition, despite the fact that the people generally were suffering under a panic. The commissioners of the Sinking Fund had already bought $246,000 of United States bonds, with the redeemable bonded indebted- ness of the state amounting to only $184,394. At the end of the fiscal year 1874 the state had a surplus of $361,604.25.8 With such a record for financial soundness and strength, it was only natural that the bonds of the state should sell at a premium. In 1885 a 5 per cent issue sold at 21/2 above par, and in 1897 an issue of $500,000 sold at a premium of 7.45 per cent.9 Despite the fine showing of the state finances gen- erally, still at certain times it was not particularly bright, and the state was indeed fortunate to make the excellent record it did, when the system of taxation is taken into consideration. In 1883 the state sud- denly awoke to the fact that it had a deficit of almost $500,000. In looking about for more revenues, the system of property assessment and taxation was investigated. It was found that the assessment of all the property in the state amounted to only $374,500,000. In this connection Governor Knott said: "Our real property alone is worth that sum." 10 The remedy was easy to find. The following year a law was passed to equalize assessments through a Board of Equalization. The law worked with excellent results. In less than a half dozen years the state had a surplus; property valuations had been increased to $483,497,690; and much personal property was listed which had heretofore escaped alto- gether.11 The amount of the tax rate was, of course, of equal impor- tance in producing revenues. In 1878 it was 40 cents on the $100 of property, allocated as follows: 15 cents for governmental expenses and 25 cents for educational purposes. Subsequently the rate was fre- quently changed, as well as the proportions for the different purposes. In 1881 it was increased to 45 cents; in 1885 it was 521/2 cents; in 1886, 471/2 cents ; and in 1890 it was reduced to 421/2 cents.12
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