USA > Tennessee > History of Tennessee the making of a state > Part 22
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In 1829 Governor Carroll said in his message, " In many parts of our country the great work of internal im- provement is advancing with astonishing rapidity. The New York canal is in successful operation. The Pennsyl- vania Canal, four hundred miles long, is nearly finished. The Baltimore Railroad, the Chesapeake Canal, the canal
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uniting the waters of Lake Erie with that of the river Ohio, and numerous other improvements of less magni- tnde, but of great value to the internal trade of the coun- try, are in a state of vigorous progression, and will in a few years be entirely completed. With these bright examples before us does it become Tennessee to be idle?" In compliance with the spirit of the age, and in obedience to a general demand from all parts of the State, the Gen- eral Assembly devised the first systematic plan of internal improvement in Tennessee. This is the plan of 1829.1
According to this, a board of internal improvement was appointed consisting of six commissioners, two east and two west of the Cumberland Mountains, and two west of the Tennessee River. One hundred and fifty thousand dollars of the unappropriated funds from the sale of the lands in the Hiwassee district were set apart; $60,000 for East Tennessee, 860,000 west of the Cumber- land, 30,000 for the Western District. The governor was ex-officio member of the board. In 1831 the number of commissioners east of the Cumberland Mountains was increased to three and made a separate board for the pur- pose of removing obstructions to navigation in the Ten- nessee and Holston rivers and their navigable tributaries, and the 860,000 already appropriated were turned over to them. This same year was established a board of internal improvement for the mountain district of Middle Tennes- see, one for Caney Fork, and one for Obed's River in Over- ton County. Also, in counties west of the Tennessee River, the county courts were directed to appoint three suitable persons, residents of the county, boards of county com- missioners of internal improvement. Special aets were passed creating boards of internal improvement for Giles, Davidson, Rutherford, and Bedford counties.
The constitution of 1834 directed that an effective sys- tem of internal improvement be established throughout
1 The act in reality was passed in 1830, January 2d.
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the State. The plan of 1829 had not worked well in practice. But little support had been extended by private citizens, and local jealousies were so strong that the plan failed to accomplish definite results.
The next plan was that of 1835, passed February 19, 1836, for the construction of railroads and turnpikes and known as the Pennsylvania Plan. The principal feature of this seheme was the formation of corporations or com- panies for the prosecution of individual enterprises. After two thirds of the capital stock had been subscribed and its payment secured by others, the State was required to subscribe to the other one third, for which bonds were to be issued. In 1839 the State was required to subscribe one half and citizens the other half. One third of the directors were to be appointed by the State. Under the operation of this law, 866,666.663 were issued to the Nashville, Murfreesboro, and Shelbyville Turnpike Com- pany, 8125,000 to the La Grange and Memphis Railroad Company with a lateral branch to Somerville, $45,000 to the Gallatin Turnpike Company, and 840,000 to the Leb- anon and Nashville Turnpike Company. This was the first faint beginnings of the State Debt. The interest on the bonds issued by the State was to be paid by the com- pany and deducted from any demands that might subse- quently accrue to the State upon its stock. In 1837-38 this scheme was still further amplified by the formation of the Bank of Tennessee, which, among other objects, was to aid in establishing a system of internal improvement in the State. The bank was required to provide for the interest of the bonds from its own profits in addition to the dividends accruing to the State in internal improve- ment companies. Should this be insufficient, the governor was to notify stockholders in the company for whose stock state bonds had been issued, who were compelled to pay in on unpaid stock enough to meet the interest, under penalty of forfeiture of charter. The State retained a
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lien on the works of the company for the amount paid in by it. This was frequently known as the Partnership Plan. The State bore all the burdens, and was unable to protect itself against the negligence and fraud of its partners.
Governor Polk, in his message in 1841, said : " Indeed, our whole internal improvement system, as at present organized, is so very defective as to demand your anxious and unremitting consideration." The amount of bonds issued under the act of 1835-36 was 8265,666.663, bearing 5} per cent. interest, and under the act of 1837-38 was $300,000 for navigation and $599,500 for internal im- provement companies, bearing interest at five per cent. Charters of incorporation were too readily granted, and works of no importance were undertaken for the purpose of obtaining state aid, which, by a judicious system of es- timates, was, in many cases, made sufficient to accomplish the whole work. It was almost impossible to persuade the inhabitants of any locality that any work of local utility was not for the general good. The number of charters obtained was so great that 84,000,000, the amount to which the state subscriptions in all internal improvement companies were limited, would not have been sufficient to pay for one half of what was actually ap- plied for. The failure to comply with the requirements of law on the part of the stockholders alone protected the State. Even the law itself was so ambiguous that no two agreed upon the same construction. An act was passed January 25, 1840, repealing all laws authorizing the governor of Tennessee to subscribe for stock in any internal improvement company on behalf of the State. This was spoken of as a dissolution of partnership. Pro- vision was made for a careful investigation to determine whether the requirements of the statute had been com- plied with. This was used in terrorem to force many companies to surrender their charters, and in a great measure accomplished its purpose.
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The financial crash of 1837 was one of the causes which forced the State to withhold aid from internal im- provement companies. But the most potent was, no doubt, the inability to devise a plan that would accomplish the result effectively and economically. In the mean time, railroads, as a means of transportation, had passed beyond the experimental stage, and the popular desire for national advancement had turned enthusiastically in that direction. It had become a mania, and as such raged with unabated fury until the beginning of the civil war. As attention was more steadily turned towards railroads, canals and the navigation of rivers received less consideration. An oc- casional reference to schemes that had once been much in the public eye is found, but nothing more. Governor Cannon in 1835 urges the construction of a canal from Savannah on the Tennessee River to Big Hatchie near Bolivar, which would shorten the distance of steamboat navigation about four hundred miles. So little interest was taken in the improvement of the rivers that 8300,000 appropriated by an act of 1841 were never spent, on account of a disagreement between the board and officers of the Bank of Tennessee.
The first railroad chartered in Tennessee 1 was the Memphis Railroad Company, in 1831. This title was, in 1833, changed to the Atlantic and Mississippi Railroad Company, which was to run from Memphis to Pulaski, there to connect with another railroad which it was sup- posed would be constructed by Alabama from Florence.2 One of the next roads chartered was the La Grange and Memphis Railroad, which received $125,000 from the State. It was perhaps this that enabled it to build the six
1 The first built was the Nashville and Chattanooga Railroad.
2 I can find in the statutes no act chartering the Memphis Railroad Company. The date is given in the act which changed the title. The act refers to December 17, 1831, and again to December 12, 1831, as the date of the first act.
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miles which were actually constructed in 1837. Railroads from New Orleans to Nashville, from Memphis to some point in Virginia, from Memphis to Charleston, from Charleston through the eastern part of the State to Cin- einnati and Louisville, were the main topics of discussion.
Perhaps the largest, certainly the most conspicuous rail- road enterprise of that day was the Charleston, Cincinnati, and Louisville Railroad. For several years it was a matter of interstate' diplomacy and negotiation. The messages of the governors and the statute books of the States are filled with mentions of it and references to it. In Column- bia, Greeneville, Charleston, Cincinnati, and Louisville meetings were held, speeches were made, and resolutions were passed. Tennessee was the last State to pass the act of incorporation. The governor was directed to subscribe 8650,000 in behalf of the State, and 832,000 in bonds were actually issued. Most of these were subsequently returned and the subscription canceled, but new vehemence had been given to internal improvements or, as it had now become, the railroad mania. But it was not without sig- nifieance that the State was compelled in 1846 to meet a deficit of interest on the bonds.
In 1845 was held the great commercial convention at Memphis, over which John C. Calhoun presided. The object of the convention was to bring together the friends of internal improvements for mutual discussion. It was here that Calhoun came out for the improvement of the Mississippi River, declaring it to be a " great inland sea." The immediate outgrowth of this convention was the build- ing of the Memphis and Charleston Railroad. The history of this enterprise forms an important chapter and played an important part in the making of Tennessee. It is worthy of being detailed at some length.
In those days a certain efficacy was attached, in the popular mind, to a railroad, entirely independent of the greater ease of locomotion and facilitated transportation
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of freight which came with it. Even so clear-headed a man of business as Marcus B. Winchester seemed to think that the advantages that flowed from a railroad stretched themselves along its rails foot for foot. In a letter written in 1834 he says: " If the Jackson company owned the property and some about the upper end of the town of Memphis they would have every inducement to string their road through our town from north to south, which would regenerate, it seems to me, every part and portion of it." In the eyes of most Americans of that day, the town that was so fortunate as to come within the influence of a railroad was like an Indian village with a powerful medicine man. With ideas such as these, it is not surprising that so ambitious a place as Memphis was eager to have a railroad. Capital, as political economists use the phrase, had not turned its attention in this direc- tion. The motive power then was a compound of agri- culture and sentiment. Roads were built, not from accu- mulated savings, but from the proceeds of a discounted incoming era of prosperity. The method of proceeding was for various local companies to be formed, each of which built, or expected to build, a fragment of road designed to connect with other fragments until a through line, as it is now called, was finished. In this way the La Grange and Memphis Railroad and the Tuscumbia, Courtland, and Decatur railroads had been begun and had failed. As its name indicated, the Memphis and Charleston Railroad was designed to connect these two cities.
The public discussion of this question elicited a general enthusiasm, and it became the leading topic of the day. The most prominent statesmen, politicians, merchants of Tennessee and Georgia and South Carolina became its warmest advocates. and men like Hayne, who had gained national fame in his brilliant debate with Webster, and Jones of Tennessee took a leading part in advocating this enterprise. Jones added to his already brilliant reputa- tion by the force and eloquence of his speeches.
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For more than a year he canvassed West Tennessee, North Mississippi, North Alabama, Memphis, New Or- leans, and Charleston. The corporation of Memphis sub- scribed 8500,000. The largest individual subscription was that of R. C. Brinkley, $15,000. Jones was elected president, and George W. Smith, secretary and treasurer. He was soon succeeded by Sam Tate. The road was divided for working purposes into two sections. The eastern division extended from the Alabama line to Stevenson, where it connected with the Nashville and Chat- tanooga Railroad, and the western to Memphis. In 1851 the letting of the contracts began. Soon after this, Jones was elected to the United States Senate. He in turn was succeeded by A. E. Mills of Huntsville, and under Mills the lines contracted for under Jones were finished. The first track laid was at the crossing of Union Street in Memphis, on April 1, 1852. But after the contracts for the rest of the work had been let, the treasury was ex- hansted. An added embarrassment was the failure to get a charter through the Mississippi legislature allowing the right of way across the northeast corner of the State. owing to the opposition of the friends of the Mississippi Central Railroad. In order to overcome this hostility, Mills and Tate for their road agreed to subscribe $125.000 of the capital stock of that concern. When submitted to the board of directors of the Memphis and Charleston Railroad this contract was indignantly rejected, some of the direc- tors declaring they would resign before accepting a charter on such disgraceful terms. At this time Tate, who lived at Memphis, was the only acting officer on the western division, Mills living at Huntsville and having charge of the eastern division. Even the warmest and most hope- ful friends of the enterprise now began to despair of its completion. The one ray of hope, however, was the fact that one man had demonstrated an executive ability and comprehensive grasp of affairs that gave promise of sub-
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stantial results. This was Sam Tate, the secretary and treasurer, and even he had sent in his resignation to take effect on the first day of April, 1854, on which day there was to be a general meeting of stockholders at Tuscumbia, Alabama. The object of the meeting was to consider the rejection or acceptance of the contract which Tate, since its former rejection by the board, had again entered into with the Mississippi Central Company. After a stormy debate the contract was accepted. Mills resigned the presidency, and Tate the secretaryship. The latter was then offered the former position but declined. Nothing could more distinctly emphasize the difference between the two stages of development in railroad building of that day and this than the fact that for several days the presidency went absolutely begging. Finally, after great persuasion, Sam Tate was induced to accept the posi- tion. Tate's first action was decisive. He made an accu- rate estimate of what money was still needed to complete the work. Already 82,000,000 had been spent. He de- cided that $1.600,000 would still be necessary. A stock- holders' meeting was at once held at Huntsville, before which Tate laid his statement of the affairs of the com- pany. All his recommendations were at once adopted. He declared that 8400,000 were necessary to complete works then in process of construction. This, as he pointed out, could only be raised by the stockholders sub- scribing for that amount of the bonds that were to be issued. It would be impossible to get Northern capital- ists to invest in so doubtful a security. Tate's reputation had gone before him, and he gained the implicit confidence of all with whom he came in contact ; $312,000 were at once taken, and he was urged to proceed with this amount. But he refused on the ground that he could not regard it as honorable to speculate at the risk of men whose bread depended upon their daily labor. After the adjournment of the stockholders, Tate, with an energy that filled with
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enthusiasm all who came in contact with him, at once set out in a buggy to visit the largest stockholders to persuade them to increase their subscriptions. On all sides he proclaimed that he had money on hand sufficient to pay off at the next pay-day, August 15, 1854, and that if the 8400,000 were not assured by that day, he would give notice to suspend work. He postponed the pay-day until the twentieth of August. After a long and arduous journey up and down the beautiful and fertile valley through which the Memphis and Charleston Railroad now runs, he drove into Huntsville on the evening of the eighteenth of August. He was met on the public square by an immense throng of citizens who had followed his course with enthusiasm, and who now greeted him with cheers. Standing in his buggy, he announced that his subscription list still lacked ยง13,000. In a moment this was subscribed by four of the bystanders, and amid cheers not unlike those that greeted Fourth of July orators during the earlier part of this century, Tate announced that the road would be a success. He promised at the time to have the road completed by the 1st of April, 1857. It is worthy of remark that the last spike was driven on the 27th of March, 1857. His calculations had missed absolute accuracy by only four days.
When the road was completed, nearly 25,000 people visited Memphis, upon the invitation of the railroad com- pany, to celebrate the successful completion of so impor- tant a work, and also to witness the marriage, as it was called, of the waters of the Atlantic Ocean and the Mis- sissippi River. This ceremony consisted in pouring a hogshead of Atlantic water into the Mississippi River amidst the booming of cannon and the shouting of the people. The building of this road not only rounded out a period in Tennessee history; it was also an epoch in the history of the Southwest. The completion of the great sub-Alpine tunnel did not affect the commercial
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intercourse and development of France and Italy more decidedly than the completion of the Memphis and Charles- ton Railroad affected the intercourse and development of the entire Southwest of the United States. The comple- tion of this road gave us the Tennessee which we have now.
In 1848 an attempt was made to establish a new system of state aid to railroads. The distinctive feature of this plan was that the State indorsed the mortgage bonds of the companies, instead of issuing its own. The State was secured by a lien on the whole stock of the company and on the road fixtures. Curiously enough, however, these bonds sold for less than par, whereas the bonds of the State were at or above par. This plan proved to be not more satisfactory than the other. Its most glaring defects were the failure to devise means by which the State could examine into the financial condition of the corporations whose bonds had been indorsed, and the failure to reserve to the State the power of legislating to protect its inter- ests. In addition to this, being an indorser and guaran- tor of the bonds issued, the ability of the State to protect itself depended on the actions of those over whom it had little control. Still another grave disadvantage was the fact that the lien for the protection of the State. depended upon the deed to be made by the company in- 1849-50 stead of public act or statute. In 1749-50 an attempt was made to correct these defects. The State was to issue its own bonds and have vested in it the title to the roads to secure the debt created for their benefit, and individual stockholders were required to accept and ratify the act. But again the legislature failed to provide measures by which information could be obtained of the condition of the companies, and also by which the State could legislate as a sovereign instead of resorting to the courts as an in- dividnal.
The act of February 11, 1852, was passed to avoid the 1
defects of all previous enactments. Under this act. the 1
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State Debt was contracted. and had it not been for the incompetency of the so-called " Brownlow regime," imme- diately after the war, when a large majority of the voters of the State were disfranchised. the success of the act would have been unmixed with evil. The bonds of the State were issued in its sovereign capacity. for the payment of which its credit was pledged, and without involving itself in any relation of trust or partnership. The manifest intention of the law-makers was to float the bonds at or above par by pledging the credit of the State for their payment, which would not have been done had any question of the primary liability of the companies been entertained. It was the intention, an intention alto- gether reasonable and well founded at the time, to provide means by which to save the State from all loss, if possible, and certainly to reduce this loss, if any should occur, to a minimum. The war could not be foreseen. The losses could not have been avoided. Had it not been for the war and the Brownlow administration, the debt of Tennes- see would doubtless have been paid in full. The act of February 11, 1852. was called an act to establish a system of internal improvements in this State. It required each railroad company to have a bona fide subscription to its capital stock sufficient to grade bridges and prepare for the iron rails the whole extent of the main trunk line. The governor was to exact a rigid compliance with these terms. After this had been done and thirty miles of the road at either terminus prepared, the governor was to issue $8,000 a mile in six per cent. state bonds, to be used in procuring rails and equipments alone. The State was to be invested, upon the issuance of these bonds, with a first lien or mortgage upon the section so prepared, with- out a deed of the company. Other sections of twenty miles each were to be treated in the same way. After the completion of the road, the State was invested with a prior lien or mortgage on all its interests, franchises, equip-
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ments, etc. The company was to deposit in the Bank of Tennessee, fifteen days before due, the interest on the bonds as satisfactory evidence that the same had been paid. Upon failure, the governor was to take charge of the road, and place it in the hands of a receiver until the interest in arrears should have been paid. If the company failed to pay the bonds when they fell due, the State was to take possession and dispose of the road to protect itself. Five years after the completion of the road, one per cent. per annum upon the amount of bonds issued was to be set apart by the company and used to retire the bonds of the State, which bonds when retired were to be a credit on the debt due the State, and these bonds were to be held and used as a sinking fund for the payment of bonds issued. Semi-annual reports were to be made under oath by the president of the company. The State reserved the right to enact all such laws as might be deemed necessary to protect its interests and secure it against loss.
An act was passed February 8, 1854, amendatory of this aet of 1852. This act increased the amount per mile to be issued to $10,000, and provision was made for issuing bonds for building bridges. On February 17,1 the length of the sections after the first thirty miles was decreased from twenty to ten miles, and on January 19. 1855, the grading of ten mile sections was to be taken in lieu of completing them. On February 21, 1856, the the sinking fund was increased to two per cent. On March 20, 1860, an act to provide for the equalization and investment of the sinking fund directed that the money and bonds paid to the sinking fund commissioners should be passed direct to the credit of the party pasing them. and operate as a release to said party for that amount on the debt due by them to the State, and the sinking fund was still further increased to two and one half per cent.
1 By an act to amend the charter of the Memphis and Somer- ville Turnpike Company and for other purposes.
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The war prevented the good effects of this law from being felt, apart from the retirement of a small part of the debt.
The total amount of bonds issued to railroads alone before the war was $14,841,000.1 As soon as the war closed, what is now called a raid was made on the treasury. From April, 1866, to December, 1868, a period which has been described as "a carnival of revelry and corrup- tion," at a time when every industry and enterprise had been paralyzed by the war, and when, by the loss of slaves, the assessed value of the taxable property in the State had sunk from 8388,936,794 in 1860, to 8225.393.410 in 1867, $14,393,000 were issued to railroads, $113,000 were issued to turnpikes, besides $4,941,000 issued under the act of 1866 to fund the war interest, and 82.200,000 under the act of 1868 to fund past due coupons. This increased the debt of the State in two years, 821.647,000. In addi- tion to this, by an act passed May 24. 1866, incorporating several turnpikes, the stock of the State in the East Ten- nessee and Georgia Railroad, amounting to $425,000, was turned over to them. This and the $113,000 issued be- tween 1868 and 1870 succeeded in building twenty miles of turnpike, as officially reported by a committee of inves- tigation. A large part of these twenty miles was built by private subscriptions paid in work.
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