The beginnings of the Cincinnati southern railway; a sketch of the years, 1869-1878.

Front matter

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Contents

By Way of Preface: , .... i. The Vote for Ten Millions,

2. First Obstacles,

3. The Cost of the Road and the Discussion of

II. First Obstacles

On June 30, 1869, four days after the election, the Trustees were appointed by the Superior Court. The court was composed at that time of Bellamy Storer, Alphonso Taft and M. B. Hagans. Judge Storer, speaking for the court, said :

It is proper to remark that the work which the city so far, by its constituted authorities, as well as by the voice of its citizens, has undertaken to perform, is one that does not depend so much on their will thus expressed, as on the ability, morally and financially, of the Trustees whom we are now about to appoint, and we have endeavored, therefore, to select from the many good men of our city to fill this important office those who we believe, from their position in the community, and from their known integrity, energy and capacity for business, may safely be confided in. We have endeavored to avoid all private interest. It has been our great aim to select those who, we are confident, will perform the obligations of their office intelligently, uprightly, and for the benefit of the city and not for themselves.

Judge Storer then announced the appointment of R. M. Bishop, B. A. Ferguson, Miles Greenwood, Philip Heidelbach and William Hooper, and closed by expressing the hope that the Southern Railroad would be a new and mutual bond between the North and the South.

The Enquirer said of the appointments:

We doubt if better selections could have been made, except that we should have liked it better if one of the Commissioners had been a practical railroad engineer.

The Commercial said, on July 1st:

The fact that no one of the Trustees is a practical railroad man may have a peculiarity of appearance. The theory is that railroad men have interests with which, perhaps, those of the city are not identical. The purpose of the city in proceeding to build the Southern Railroad, so long wanted, is, if the city understands itself, to have a road that will be run for the benefit of Cincinnati, and not to be tributary to any particular road or system of roads. Then the Trustees as appointed, being free to choose, and without the prejudices and predilections that are acquired "in operating certain lines of roads, can employ the best available talent. The aim of the Judges, in appointing the Trustees, was, above all things, to obtain a representation of the city of high intelligence and perfect integrity — to compose a board of men who could not afford to do wrong, or permit wrong to be done. Practical railroad men will not be scarce where the work is to do.

A " Workman," in a somewhat bitter communication, maintained that there should have been a workman on the Board, for, he said, "the strongest appeals were made to the workingmen of Cincinnati' ' on election day, and he held that the result of the election was largely due to their votes.

The article in the Commercial on the appointments called forth the following comments from the Gazette:

Consolidation of lines is the order of the day, and this city would find its Southern road left out in the cold if it should refuse to make the partnership running arrangements which other roads find necessary to their business. The city has undertaken this work because private capital would not. All it asks fe that the road be built. When done, whatever management is best for the profits of the road, will be best for the interests of Cincinnati. And if there be a way by which the Trustees, by lending a portion of this authorized credit upon adequate guarantees, or by constructing in the name of city a small portion of the road chiefly by private or railroad capital, that is the way to take. The object is to get the Southern road with all the aid that can be had from other sources, either local or railroad, and with the use of the smallest portion of the authorized capital that will secure the purpose.

A day or two later, the same paper said: The notion that this road is to stand aloof from all railroad alliances and to dictate terms to the railroad systems of the West and South is foolish.

On July 6, 1869, the Board of Trustees organized by electing Miles Greenwood, President, and H. H. Tatem, Secretary. Three days later, the Trustees asked the City Council for an appropriation of $10,000 to make the necessary preliminary surveys, stating that they did not deem it advisable to issue bonds until they had obtained the consent of Kentucky and Tennessee for the exercise of their powers.

First Obstacles. 15

So the weary road was at last begun, and even at the beginning, it was apparent that there was clashing of opinion as to the way in which the road, when built, should be operated; and also a hope that Cincinnati would not have to spend the ten millions which had been authorized. Nowhere, in public discussions, in reports of committees, in editorial comments, does there appear a word to indicate that the ten millions would prove quite insufficient. All that came later.

The Trustees employed on August 6, 1869, Mr. W. A. Gunn as Chief Engineer, and placed him in charge of the preliminary surveys, two sunning parties being placed in the field. At the same time preparation was begun to secure enabling acts in Tennessee and Kentucky.

Tennessee passed the enabling act on January 20, 1870. The Kentucky Senate defeated the bill on March 1, 1870, by a vote of 22 to 13; and the House four days later, defeated it 03' 48 to 44. A month later, Mr. Bryant Walker, City Solicitor, brought suit in the Superior Court, at the instance of Mr. K. W. Kittredge, to test the constitutionality of the Ferguson Act. On January 4, 1871, the Superior Court, in General Term, through Judge Taft, unanimously upheld the act. The case was at once taken, on error, to the Supreme Court. The next day, January 5, 1871, the Trustees again introduced their bill in the Kentucky Assembly, and again met defeat — in the House on January 25, 1 87 1, by a vote of 44 to 43; and in the Senate on the 9th of March, 1871, by a vote of 23 to 12 The opposition to the bill before the Kentucky Assembly was characterized by Mr. C. B. Simrall, the attorney for the Trustees, as ''the most determined and positive that was ever inaugurated against any bill before any legislature; there was never such opposition to any measure before the Kentucky Legislature as there was to this."

Thus, twice beaten in Kentucky, and the question of the constitutionality of the Ferguson Act pending in the Supreme Court of Ohio, things drifted along to November,

187 1, with nothing accomplished, save the work in surveying, which, of course, was not of a sort that the voters of Cincinnati could be informed about, or, if they had been, could have formed any intelligent idea of.

Meantime, there had been certain important railroad movements of the then great Eastern lines toward Cincinnati, and there was talk in the newspapers, and especially in the Gazette^ of there being, through these lines, not one, but two Southern railroads, the idea being that one or more of the great systems, would, seeking Southern business, either build its own line, or co-operate with Cincinnati and that Cincinnati could then get its Southern road by giving a part of the ten millions authorized as a bonus. This view had been elaborately set forth — it was, as will be noticed, in a way, a return to the old view of Judge Dickson — when on December 19, 1871, Mr. Theodore Cook introduced, on the Chamber of Commerce, a series of whereases and resolutions, among which were these:

Whereas, nearly three years have elapsed since the passage of the Ferguson law and action of the people, within which time the great lines of railroads leading from the seaboard to the West have centered in our city with the purpose of making this point a basis for extending lines to the West and South, which fact affords reasonable grounds for the belief that private enterprise will, at an early date, undertake the building of a line of railway from this city to the South, therefore,

Resolved, that the proposition to build the Cincinnati Southern Railway, at the cost of the city, is dangerous in precedent and unsound in policy, and that any probable good to result from such action would be more than counterbalanced by the depreciated credit of the city loaded with debt, and the onerous taxes thereby imposed on the city;

Resolved, that it is the sense of the Chamber that the effort now being made to obtain a charter from the State of Kentucky should be abandoned; and that the Legislature of Ohio be memoralized to repeal all laws granting to cities of the first class authority to build railways.

The Cook resolution gave rise to a long and bitter discussion, which lasted several months.

III. The Cost Of The Road And The Discussion

It will be observed that the Cook resolutions attacked the Ferguson Act, not only on the ground that conditions had changed since June, 1869, but that the theory of the Act, the building of a railroad by a city — was unsound. It was practically the first time the wisdom of the policy had ever been questioned. The request for the consideration of the resolution was signed by John Kyle, I^ewis Glenn, Augustus Wessell, E. Dexter & Sons, Thomas Emery's Sons, Richard Martin, Samuel J. Hale and W. J. L,ippincott.

Two days after this firebrand was thrown into the Chamber of Commerce, Mr. Ferguson wired from Columbus that "Chief -Justice Scott of the Supreme Court had announced the unanimous opinion of the court in favor of the constitutionality of the Southern Railway L,aw. ' ' The next day Mr. Bissell introduced in the Board of Aldermen a resolution, reciting the Cook resolutions, and requesting the Legislature "to repeal the Southern Railway I^awat the earliest possible moment," and instructing the City Auditor to withhold his signature to any bonds the Southern Railway Trustees might offer. The resolution was referred to the Committee on I,aw and Claims.

Thus the attack was opened along the line.

The attack on the Ferguson Act was at once met by those in favor of it, by an appeal to the Board of Trade. In that body Mr. Macneale introduced resolutions in favor of standing by the Trustees. The whereases were as follows:

Whereas, The construction of such a road will be of inestimable benefit to the commercial and manufacturing interests of the city, and a means of largely increasing the value of real estate; and

Whereas, The increased prosperity will enable all classes of our citizens to pay the larger- taxes with greater ease than they pay the present taxes assessed; and

Whereas, The credit of our city will be much benefited by the increase of commerce, population and taxable property which will result from the completion of the proposed railway; therefore

Resolved, That we render the Trustees all the assistance in our power.

A meeting was held at the Board of Trade rooms on December 28th. At that meeting, which was largely attended, Mr. R. M. Bishop, one of the Trustees, made a few remarks, and at the end, read the following letter from Chief Engineer Gunn:

R. M. Bishop, Esq. : In response to your inquiries, I submit the following statement in regard to the Cincinnati Southern Railway. The distance from Cincinnati to Chattanooga, by the surveys made, will range from 333 to 340 miles. The distance by the Kentucky Central Railroad will be 353 to 363 miles. The maximum grade will be 66 feet to 70, 80, 90 or 100 feet on the different routes, and the curvature is favorable. The high grades are confined to the central, or mountain, part of the line, and the rest will be much easier. The estimates are far enough advanced to enable me to say that the ten million fund placed at your disposal by the City of Cincinnati will build the road from Cincinnati to Chattanooga. These estimates are based upon rates at which I have placed work under contract within the last sixty days, and will give a first-class road, worth all its cost.

(Signed) \V. A. Gunn, Chief Engineer, Cincinnati Southern Railway.

Mr. Bishop said ' ' that his candid opinion was that the road could be made and equipped, at the largest estimate, for less than twelve millions," and also " that he expected to get the right of way for the Southern road without spending a dollar."

The morning of the day when Mr. Bishop read this important statement from Mr. Gunn, the Commercial, in the course of a long editorial, after speaking of what it called "a guess" by General Rosecrans, conveyed in a letter to Mr. Ferguson, that "the road should not cost over nine millions," proceeded thus :

The Gazette thinks the road can be built in such a way as not to cost Cincinnati over five millions. Our citizens know, of course, that the road will cost much more. Whoever may be so sanguine as to believe the road might be worth the millions we would put into it, — i. e. % that its stock would be worth par, — there is not a capitalist who will say he thinks the investment will be worth fifty cents on the dollar. It would be cheaper, therefore, to give away a million or so and get the road than to build and own it. We would do well if we received three per cent on twenty millions — i. e., if the road, after costing twenty millions, would pay six per cent on ten millions.

The Board of Trade adopted the Macneale resolution, pledging to the Trustees the support of the Board, on January 4, 1S72. A feature of the meeting was a carefully prepared statement by Mr. A. P. C. Bonte, in the course of which he said, three of the Trustees being present :

We have the statement of the Engineer of the Southern Road that the road can be built for a sum inside of ten millions, and that this amount contemplates the road complete from Cincinnati to Chattanooga, and includes iron bridges across the largest streams, and wood and iron over the smaller, and also includes the crossing of a bridge into the City of Cincinnati. It is the general opinion of those acquainted with the subject that the road will pay after completion, and for three years at least one-half of the interest on the bonds, and for all time beyond that, pay the interest in full and a surplus besides for the creation of a sinking fund to take up the bonds.

With the passage of the Board of Trade resolutions, interest was transferred to the Chamber of Commerce.

The Cook resolutions had been referred to a special committee of five, appointed by Mr. C. W. Rowland, then President of the Chamber. The committee, unable to agree, made two reports. The majority report was in favor of the resolutions, and was signed by Theodore Cook, S. Davis, Jr., and J. J. Emery. In the course of a lengthy statement, the members of the committee said : "If the city builds the road, it may some day become a question if it is not best to give it away and be rid of it. We feel we hazard nothing in saying that when this road is built and equipped ready for business, it will have cost the city more than fifteen millions of dollars."

The minority report was signed by James H. L,aws and Robert Mitchell. It dwelt upon the advantages to accrue to the commercial and manufacturing interests of the city, and expressed the expectation that there would be large do-

20 77ie Beginnings of the Southern Railway.

nations along the line of the road, and the belief that " the road can be leased for a rental sufficient to pay the interest upon its cost, and to provide a sinking fund for the redemption of the bonds necessary for its construction."

While the Cook resolutions were pending in the Chamber of Commerce, public interest and discussion grew in feeling. The newspapers talked freely, and published many communications on both sides of the question. A few quotations will serve to show the state of public opinion.

The E?iquirer of January 6, 1872, said:

In the Southern Railroad meeting at the Board of Trade rooms, Col. Iy. A. Harris expressed the opinion that a large majority of the people are now opposed to further proceedings under the Ferguson Bill. We presume nobody who mixes much with the public will deny this assertion. As times have changed, so have the people. Whether the sentiments of the city in the determination of the question will have the slightest influence remains to be seen.

The same paper said the next day:

The Gazette speaks of the Ferguson Bill being almost unanimously ratified by the City of Cincinnati. It received about 15,400 votes to 400 against it. But then we have 36,000 voters in this city. Were a vote now to be had, we suppose it might receive 6,000 out of the 36,000.

The following day it discussed the situation at length, saying, among other things:

The Chamber of Commerce is to vote to-day upon the Cook resolutions. These resolutions declare the inexpediency of proceeding in the construction of the Southern Railroad under the present scheme. In this connection we desire to impress a point or two. It is not criminal nor an evidence of lunacy to hold to the belief that a Southern Railroad can be secured at ten times less cost by paying a downright bonus to a responsible corporation. Neither is it an offense against society to advance the doctrine that the city's interests will be best subserved by the passage of another act, similar to Ferguson's, with proper and much needed restrictions, providing for the construction of a portion of the line, and the leasing of it to a company upon the condition that they build the remainder. It is no evidence of insanity to believe that under the Ferguson Bill the Trustees of the Southern Railroad are unrestricted in the matter of expenditure. In addition to this, no man need fear that he will be driven out of society because he advances the idea that the recent decision of the Supreme

Court does not sustain the validity of a bonus. It certainly does, and there need be no fear that the killing of the Ferguson Bill will forever deprive us of our badly-needed Southern road.

The Commercial was expressing similar views. In its issue of January 7, 1872, it said:

Two and a half years ago, there was not, so far as we could see, any other plan that promised success save that of the Ferguson Bill. We have been disappointed with the slow progress made under the Ferguson plan. Time has passed until conditions have changed. The theory that the city would make money by the building of the road is absurd. The calculations that it would only cost ten millions are unwarranted by railroad experience. We would vote for the repeal of the Ferguson Bill because we believe money would be saved and no time lost by its repeal, and it is possible that though the Chamber of Commerce may flinch from a vote for repeal, as the case stands, the mass of people of Cincinnati might not do so.

The Gazette was the only one of the English morning papers that stood by the Trustees, and opposed the Cook resolutions. In its issue of January 6, 1872, two days before the vote in the Chamber of Commerce, it said, in the course of a strong article:

People may rest assured that if the Southern Railroad is to cost over twelve millions of dollars, the Trustees will never build it.

The Chamber of Commerce voted on January 8, 1872, on the question, " Shall the Ferguson Bill be repealed?" and the vote resulted, yeas 147; nays 361. But the fight went on, transferred, however, from the Chamber of Commerce to the City Council and the General Assembly.

The bonus idea, as set forth by Mr. S. H. Goodin in 1869, and subsequently urged by Judge Dickson in 1869, in opposition to the Ferguson plan, had been revived in the latter part of 1870, by the presentation to the City Council of a memorial from Judge Dickson, enclosing a copy of his original bill, and suggesting that if the city would act under that, and obtain the legislative sanction, it would accomplish the desired object. A Committee of Council was named, and went into correspondence with a number of persons, among whom was Mr. David Sinton, who assured the Committee that for a bonus of four million dollars he would form a company and give ample bonds for the construction of the road. The Council Committee made application to the General Assembly for a charter, but owing to the late period at which the matter was brought up, the permission was not obtained.

The General Assembly of Ohio met a short time after the vote in the Chamber of Commerce, and Mr. John T. Fallis, a member of the Hamilton County delegation, presently introduced a bill repealing the Ferguson Act and authorizing Cincinnati to pay a bonus of three million dollars for the construction of the road.

Meantime the Bissell resolution was before the City Council, covering practically the same ground as that of Mr. Cook in the Chamber of Commerce; and the Trustees were pressing for the third time on the Kentucky Legislature the enabling act which they had vainly attempted to obtain in 1870 and again in 1871. The Kentncky Senate passed the act on January 27, 1872, but with restrictions which were exceedingly unsatisfactory to the friends of the bill. The House passed the bill a few days later, and on February 13, 1872, it was signed by Governor Ieslie and became a law.

Thus, at one and the same time, the Trustees had on their hands, a fight against the Fallis Bill in the General Assembly, against the Bissell resolution in the City Council and against the prevalent dissatisfaction with the onerous terms imposed by the Kentucky legislature. A few expressions, from many, will show the state of public feeling.

Thus, on February 2, 1872, the City Council adopted, by a resolution of 29 to 8, a resolution requesting the Trustees to "reject the charter under the unjust and illegal exactions, limitations and burdens put upon Cincinnati by the Kentucky Legislature. " In the course of the debate Mr. Fitzgerald said:

The Trustees are making hot haste to issue bonds; if they do it hell is not hot enough and eternity long enough for the punishment the citizens of Cincinnati will judge them as deserving.

Mr. Woolley said: The Ferguson Bill as passed by the Legislature of Ohio is the most outrageous and corrupt piece of legislation that has ever disgraced the annals of a representative country.

Commenting on the action of Council the Commercial said :

Public sentiment has changed. The vote in the City Council is a fair index of the feeling to-day among the business men and taxpa3 r ers. Some of the reasons for this are that great rival railroad corporations centering here cannot stop without new connections with the south; that for a bonus of one-tenth the proposed sum private parties are ready to build the road; that the ten millions will not build the road, and the amount spent will not be justified by any results; that it will be a road running through and necessarily controlled by another state; that there is nothing to prevent the tapping of it after it is built; that the road cannot possibly be controlled in the interest of Cincinnati; that the whole theory is founded on a false idea of government. Why should not the Ohio Legislature repeal a law which the citizens of Cincinnati are opposed to ?

The Gazette said :

For our part, we are utterly opposed to forcing upon the people of Kentucky an expenditure of ten millions of Cincinnati money to build a railroad in that state under conditions which treat it as a hostile project.

The Gazette carefully estimated the cost of the road as to be eight and a half millions and published the amount in black-faced type. It strongly opposed "The Bill of Fallacies," "to create a railroad syndicate with a fund of three millions to give away and to repeal the Southern Railroad Charter." It wanted to know "what evidence is there that Mr. Fallis represents any Cincinnati constituency or interest, or any public opinion ? " At the same time Judge Dickson was printing in the Gazette, and other papers as well, column after column in support of the Fallis Bill.

The Enquirer was saying that "a resolution in the nature of the Fallis Bill, and positively to limit the liability of Cincinnati to a given sum, is excellent and should be carried out. ' ' Mr. Miles Greenwood was testifying before a Council Committee, "I think the cost will not go beyond ten millions," and Mr. Joseph C. Butler, before the same Committee, was estimating the cost at twenty millions, with five or six more to equip it, and declaring that the road, if built, "would benefit Kentucky and help Covington amazingly, and place a burden upon our shoulders that it would be very difficult to get rid of." Mr. N. G. Nettleton thought ' 'the road would probably not be worth what it cost, and that the amount of taxation would decrease the price of property so as to prevent an increase in the population of the city." Some people were in favor of having Council direct the Mayor to submit to popular vote the question of preference between the bonus plan and that of the Ferguson Bill. Men were quoting with approval a sentence from the opinion of the Supreme Court: "Had we jurisdiction to pass upon the wisdom of the Ferguson Act we should probably have no hesitation in declaring it an abuse of the taxing power." And the Commercial was saying:

Trustees and able editors may deceive themselves into the belief that the road can be built throughout for ten million dollars, and that the earnings of the road will pay the interest on the investment, but they will not deceive the people to that extent, for too many of them have had in that branch of business the education of experience.

Wherever the discussion was carried on, whether in the Conncil Chamber, the Chamber of Commerce, the Board of Trade, or the newspapers, the evideuce was clear that Cincinnati had begun to have some realizing sense of the tremendous work on which more than two and a half years before it had all but unanimously decided to embark. It will be noticed from the extracts which have been given that the discussion turned, at this time, almost solely on the question, What would the road cost ? And would it pay ? Only casual reference was made to the wisdom of this exercise of the taxing power.

The upshot of the discussion was the passage by Council of a resolution, by a vote of 31 to 7, calling upon the General Assembly to pass a bill limiting the expenditure of the Trustees to ten millions, and fixing the compensation of the Trustees. The General Assembly took no action. It consigned to the limbo of unpassed bills the bill proposed by Mr. Fallis. March 25, 1872, two of the obnoxious objections of the Kentucky Act were repealed. A year later the last was repealed.

Practically the Trustees had won all three of their fights,

26 The Begimiings of the Southern Railway.

IV, GETTING READY TO WORK.

After the discussion of 187 1-2, public interes t drifted away to other important things — the Presidential campaign, especially, and the columns of the newspapers and the minds of men were chiefly concerned with, at first, whether Charles Francis Adams or Horace Greeley was to receive the nomination at the hands of the Liberal Republicans; and later, whether Grant or Greeley should, and would, be elected President.

It was while the public attention was thus occupied, that the Trustees offered for sale the first lot of Cincinnati Southern Railroad bonds. They bore seven per cent interest and were dated July 1, 1872. The issue amounted to only $150,000. Proposals were asked for through circulars, mailed to 101 bankers, capitalists and investors in this city, and other cities in the country. Only three bids were received — all from this city. The bonds were awarded to the First National Bank, at 102.55 an d accrued interest — and this was the highest price the city obtained for any of the Southern Railroad issues.

In the fall of 1872, Mr. Hooper, one of the Trustees, went to Europe, and was authorized by resolution of the the Board of Trustees "to make known to foreign capitalists the authority and wants of the Board, and to ascertain what kind of a bond could be sold abroad to advantage. ' ' He accomplished, however, nothing, except to ascertain that the restriction on the price of the bonds to par — it was a restriction imposed by amendment in the General Assembly to the original bill — made sales difficult. In his testimony before the Investigating Commission given six years later, Mr. Hooper said: