The Blue Ridge Railroad
Comments on the prospects for the Blue Ridge Railroad, with comparisions to Virginia and New York systems.
No. XI.
It is, to say the least, a rash and reckless assertion, that no railroad passing through a mountain region, has been built anywhere in the United States with private capital, and that such a road is of necessity a State work. It is no doubt true enough that an undertaking of which the profit is so extremely remote and improbable, as that of the Blue Ridge Railroad has been shown to be, will not induce individual subscriptions; and this has been signally demonstrated by the remarkable paucity and caution of the individual subscribers, of whom very few subscribed more than one share, and even the President and Directors not many more, until an amendment of the charter (which they strenuously resisted), made it necessary that each of them should hold at least fifty shares. But the instances in which such railroads have been constructed by States and as State works, are exceptions; the general rule is otherwise, and many more such enterprises have been undertaken and accomplished by the associated efforts and contributions of individuals. The Western and Atlantic Railroad of Georgia, which is often called the State Road, because it was built by, and belongs to the State, was not undertaken by the State for the reason that it was to be constructed through a mountain region–for it, in fact, passes over a comparatively level country—and though it has a tunnel in its course, that is not through a mountain, but a low ridge, which an ordinary traveler would scarcely have noticed, and which, it is said, might easily have been avoided by better engineering. The State undertook the construction of that road, because it was to traverse a remote and fertile territory, then recently acquired from the Indians, the settlement and cultivation of which would have been greatly hindered and retarded by the extreme difficulty of getting its produce to market. Nor is it true that the State never faltered in the prosecution of the work; for, before it was completed, the Legislature refused to raise any more money on the credit of the State, and could not be induced to go farther than to authorize the borrowing of money, for the repayment of which the lenders were to depend entirely upon the profits of the road, having no right, in case that security should prove insufficient, to call upon the State for payment. Neither is it true that North Carolina "carried forward her State road entirely with State funds." One this subject Mr. Memminger either did not take sufficient pains to inform himself before he assumed to instruct others, or he was misled by those from whom he sought information. There is indeed, properly speaking, no such thing as a State railroad in North Carolina. The State did, either by subscription to the stock, or in some other form, furnish three–fifths of the funds necessary for the construction of the North Carolina Central Railroad, which, by the way, is not any more than the Western and Atlantic
Railroad in Georgia, a road passing through a mountain region. It may be that in Virginia the mountains have been scaled at two points by railroad, but neither of them was a State work, though to one of them, at least, the State did contribute, either by subscription or loan, two-fifths of the requisite means. But the most important fact in relation to all these works is studiously kept out of view. They are all within the territorial limits of the States which constructed or assisted to construct them. Not one of the States has ever built or aided in building a railroad anywhere else than upon its own soil. The nearest approach to such a thing was made by Virginia in the case of the Roanoke Valley Railroad, to which the State contributed three-fifths of $400,000–two-fifths in the shape of a loan, and afterwards one-fifth in preferred stock; but that road lies about one-half in Virginia and the other in North Carolina, the upper half being in Virginia, so that it furnishes an outlet for the produce of a part of that State. Yet we are invoked by the example of other States to furnish the means for building a railroad, of which nearly three–fourths will be beyond the limits of South Carolina, and which is to afford an outlet for the produce of Georgia and North Carolina and Tennessee.
In the very beginning of this discussion it was shown that, according to the most favorable view that could be taken, assuming that the actual cost of the work would not exceed the estimates (a thing which never yet happened in the history of railroad enterprises) and that every thing should go on smoothly and regularly, without the occurrence of any unforeseen or extraordinary difficulty, the contributions of South Carolina would certainly amount to more than $5,000,000; and it would be very easy by a few additions, which could not be reasonably disputed, to carry it up to at least $6,000,000. It is therefore quite unnecessary to attempt any further answer to the assertion that "the whole extent to which the State is to be involved is $1,000,000 of additional subscription, and $1,000,000 of guarantee."
But we are assured that our taxes will not be increased by any greater addition than may be necessary to pay the interest on the debt which the State is to contract on account of the Blue Ridge Railroad; that the Bank will pay the principal if we give it time, and that it can pay $6,000,000 in about twenty–five years, and $9,000,000 in about thirty years.
In human affairs, and with our limited and imperfect capacity, we have no other, and certainly no better, means of judging of the future than by reference to the past. Now it appears from a careful examination of the reports of the President and Directors of the Bank, that in the period of thirty–six years, between the 1st of October, 1822, when the profits of the bank began to be reserved as a sinking fund for the payment of the public debt, and the 1st of October, 1858, the bank paid the following debts, viz:
| Five per cent stock of 1820… | $800,000.00 |
| Five per cent stock of 1822… | 200,000.00 |
| Five per cent stock of 1824… | 250,000.00 |
| Five per cent stock of 1826… | 300,000.00 |
| Six per cent stock of 1826–Mrs. Randolph… | 10,000.00 |
| Five per cent stock of 1838… | 200,000.00 |
| Six per cent stock of 1839… | 600,000.00 |
| 2,360,000.00 |
| 1st October, 1858… | 1,843,803.37 |
| Making an aggregate of… | $4,203,803.37 |
Then if, in thirty–six years, they have been able to pay only $4,203,803.37, it must be ciphered out by some other rules than such as are found in Doball's or Pike's Arithmetic, how they are to pay $6,000,000 in about twenty–five years and $9,000,000 in about thirty years. In order to prevent misapprehensions it may be proper to remark that, in the mean time, the bank has paid some portions of the Fire Loan debt, but there payments were made not out of the Sinking Funk, which consists of the profits of the bank, but out of the Fire Loan Fund itself; and whoever will take the trouble to examine the annual statements of the bank will see that, whenever any part of that debt has been paid, there has been a corresponding diminution of the amount for which the bank stands charged on account of the Fire Loan. But, supposing that the bank could pay $6,000,000, or even $10,000,000 in twenty–five years, and half as much more in thirty years, does it follow that they money ought to be expended on doubtful schemes of improvement, and that, too, in other States? If we have such a mine of wealth, why should we be burthened with any taxes at all? Why not let the bank defray the expense of the State government and all our public establishments! Or, if we prefer to be taxed for those purposes, and to devote the income of the bank to objects of material improvement, can we not find enough to do at home? Have we not within our own borders immense swamps, embracing millions of acres of the richest soil, which the expenditure of less than $6,000,000 in twenty–five years, or $9,000,000 in thirty years, might redeem from utter worthlessness and add to the productive resources of the State?
No people ought to murmur at such taxation as may be necessary for the sufficient and liberal maintenance of their government; and only demagogues of the lowest class ever seek to encourage and excite such discontent. But taxes are not blessings, and a reasonable jealousy of unnecessary taxation is a sound and wholesome popular investment. Whenever we find public men making light of burthensome taxation, and strenuously advocating great public loans, and extravagant expenditures on speculative projects,
It is time to be vigilant and cautious, for there is reason to apprehend something wrong in the affairs of the commonwealth.
No. XII
The assertion that this road would be worth all that it is expected to cost, may be understood in two sense: either that it would be worth its cost, as a productive and profitable investment of money, and as property which might be sold for as much money as it cost; or that, though it might be worth much less than its cost, or even nothing as property, the commercial, industrial and political benefits to accrue from it worth much less than its cost, or even nothing as property, the commercial, industrial and political benefits to accrue from it would be a full equivalent for all the money expended upon it. Understanding it in the first sense, if it be meant to embrace the general proposition that all railroads are worth what they cost, it is certainly not true.
There are in South Carolina eight railroads finished and in operation. Assuming that the market price of their stocks furnishes the measure of the pecuniary value of the roads regarded as property (and if that does not, where else shall we look for it?) not one of them, unless it may be the little King's Mountain Road, is worth what it cost. Some of them have no market price at all. The stock of the South Carolina Railroad is now at or a little above par, but the par value of the stock falls short of representing the cost of the road by at least the amount of the company's debt, which is about $3,000,000. The stock of the Charlotte and South Carolina Railroad, the only other one besides the King's Mountain Railroad which gives dividends and has a market price, never appears in our published prices current, and its money value is not easy to be ascertained; but only a few months ago it was little if any thing about 50 per cent, and it is not now more than 75 per cent. The following statement, taken from the American Railway Review of the 1st of September instant, exhibits the market prices of shares in twelve of the most important railroads in the northern and northwestern States, on four different days during the month of August:
| Aug. 5th | 15th | 22d | 29th | |
| N.Y. Central R. R. shares… | 72 1/2 | 71 | 73 | 75 /2 |
| Illinois Central R.R. shares… | 63 3/4 | 64 1/2 | 65 1/4 | 65 3/4 |
| Galena and Chicago… | 63 1/2 | 64 3/8 | 66 1/4 | 69 1/8 |
| Chicago and Rock Island… | 60 3/4 | 62 | 64 3/8 | 68 1/8 |
| Reading R.R. shares… | 43 1/2 | 43 5/8 | 44 | 44 |
| Michigan Central R.R. shares… | 40 3/4 | 43 1/4 | 43 3/4 | 46 |
| Michigan Southern R.R. shares… | 7 | 6 1/4 | 7 3/4 | 8 1/4 |
| Balt. And Ohio R.R. shares… | 56 | 56 3/4 | 57 1/4 | 58 1/2 |
| Hudson River R.R. shares… | 31 1/2 | 31 2/3 | 32 3/4 | 34 3/4 |
| Cleveland and Toledo R.R.… | 20 3/4 | 19 | 22 ½ | 24 3/4 |
| Harlem R.R. shares… | 9 | 9 ½ | 9 7/8 | 10 1/8 |
| N.Y. and Erie R.R. shares… | 5 | 5 1/4 | 5 1–9 | 5 1/4 |
There figures represent the rate per cent which the market price of the stock bears to the par value. The New York Central Railroad, which transports a very large portion of the immense commerce and the almost countless multitude of travelers between the city of New York and the great chain of lakes had, in 1857, a gross income of $8,027,251–$3,141,637 from passengers, and $4,869,614 from freight; and in 1858, $2,532,647 from passengers, and $3,995,766 from freight–making an aggregate of $6,528,414; yet we see that its stock is about 25 per cent below par. The New York and Erie Railroad, which has one terminus at New York and the other on Lake Erie, and is the most direct and shortest route between them, received in 1857, $5,742,606, and in 1858, $5,151,616– yet its stock is nearly 95 per cent below par and the stock of the Baltimore and Ohio Railroad, which brings by the Blue Ridge Railroad, is more than 40 per cent below par. How then can it be possible that the Blue Ridge Railroad, regarded as an investment of capital, should be worth its cost? We have seen that it would not bring down the produce of the West, destined for the general market of the world–that it would not carry up the foreign merchandize required for the consumption of that region, and that it would transport very few passengers. There is the strongest probability that it would not even bring the western produce required for our own consumption, or at least for the use of that portion of the State of which Charleston is the most convenient centre of distribution. Then from that source would it derive the income necessary to make it a productive investment? The chief engineer estimates the cost of the road and equipments at $8,691,677, but when we take into account the interest to be paid during the progress of the work, and other extraordinary demands which always spring up in the course of such undertakings, it is extremely moderate to set down the actual cost at $9,000,000. To yield a fair return on a capital of $9,000,000, there ought to be a nett income of at least $630,000, clear of all expenses. The average expenses of the South Carolina Railroad, the Charlotte and South Carolina Railroad, and the Greenville and Columbia Railroad, amount to about 53 per cent of their gross receipts; so that assuming the same ratio for the Blue Ridge Railroad, it would require a gross income of at least $1,275,000 to produce a nett revenue of $630,000. In other words, the gross receipts of the road must be more than double those of both the Greenville and Columbia Railroad and the Charlotte and South Carolina Railroad put together. But unless all that has been said in the course of this discussion, relative to the prospective income of the road, is utterly untrue, there is no reason to believe that it would be even equal to that of either of the two roads above named. If, then, it would not be worth its cost as an investment of capital, let us consider it in the other aspect: that is, with reference to the political, commercial and industrial benefits which
Might accrue from it to the State; and we shall find this question very closely connect, and , indeed, almost identical with the first; for if the road would have but little business and an inconsiderable pecuniary income; if it would not bring us either the export trade or the import trade of the West, in what other conceivable way could it produce any beneficial effects upon the commercial, industrial or political interests of the State, and how would "the State receive ample compensation for the outlay she is called upon to make?"
But we are told that one of the principal inducements to build the Blue Ridge Railroad is, that the control which the State of Georgia has over its own road is exerted to give every advantage to Savannah, and that the persons who have the management of that road make partial discriminations in favor of the trade of Savannah and against that of Charleston, and therefore we ought to have a road of our own. It have been very often asserted, but has never yet been proved, that in the management of the Western and Atlantic Railroad preference is given to produce destined for Macon and Savannah over that which is intended for Augusta and Charleston. Such preferences are strictly forbidden by the law of Georgia, and the superintendent of the road is sworn to observe the most rigid impartiality. Any departure from this rule would be quite as injurious to the trade of Augusta and the business of the Georgia Railroad as to the commerce of Charleston, and the managers of the Georgia Railroad would, therefore, be vigilant to detect and prompt to denounce it; yet, so far are they from sustaining the charge thus recklessly made by Mr. Memminger and others, that they unhesitatingly deny that it has any foundation in truth. This one, then, of the principal reasons for having a road of our own, entirely fails. But how can we have a road of our own to Knoxville, when, to reach that place, we must pass through two States and over a part of a third? How is it possible for one State to have a road of its own through the territory of another sovereign and independent State? Could England have a highway of her own through the territory of France, or France a highway of her own over the soil of England? It would be difficult to devise anything more likely to disturb and interrupt our amicable relations with the neighboring States, than a railroad passing through their territories and manage and controlled by our citizens, and in obedience to our policy. Everybody knows that jealousies and discontents are always rife among the people of the immediate country through which a railroad passes. However great may be the benefit it brings them, it is always less than they expected, and their disappointment breaks out on every occasion in murmurs and complaints against the management of the road. If the road should be in one Sate and the management in another, the government of the former would always sympathize with its own people, and would make its sympathies felt by unfriendly legislation, for which it would be easy
Enough to find abundant powers and pretexts. This idea of a railroad of our own in other States, is quite original and peculiar, and certainly savors more of that presumptuous arrogance, of which we are sometimes accused, than anything that we have every done.
