Railroads in Mississippi
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Source: Rowland, Dunbar, ed. Mississippi, Comprising Sketches of Counties, Towns, Events, Institutions, and Persons, Arranged in Cyclopedic Form, in three volumes. Vol. 2. Atlanta: Southern Historical Publishing Association, 1907. pages 502-516

This section begins approximately at the top of page 506.

In 1866 the railroads memorialized the legislature for the repeal of a tax of one-half cent a mile on each passenger carried, in which they said that their whole property had been heavily mortgaged before the war to pay for construction. The creditors in the North and Europe were urging the payment of six years interest, delinquent during the war. Owing to the ravages of war the companies had been for 18 months struggling for life. They had succeeded beyond their modest sanguine hopes, but the stockholders had never received a dollar since the roads were built, and dividends could not soon be expected. This was signed by Gen. Beuregard, president of the New Orleans road, A. M. West, president of the Central, F. M. White, president of the M. & T., Sam Tate, president of the M. & C., M. Emanuel, president of the Southern, M. B. Pritchard, superintendent of the Selma & Meridian, and Abram Murdoch, for the M. & O. This was without avail. In January following the governor reported that the Southern had agreed to an arrangement and was collecting the tax, but the others had done nothing. He asked for a law authorizing compulsion. The legislature of October, 1865, appointed a joint committee on Internal Improvements to investigate the conduct of the railroads which had received charters, to ascertain whether they had faithfully discharged their duties to the State and people, according to the spirit and letter of their charters, or had violated them and worked a forfeiture of the charters. The constitutional conventions of 1865 and 1868 refused to recognize the validity of the settlements of 1863, and subsequently the courts held that the State could recover the full amount of the loans. When the N. O., J. & G. N. was about to go into the hands of a receiver in bankruptcy, in 1870, Governor Alcorn, in a message to the legislature, declared the company had broken faith with the State in every instance of their mutual contracts, defaulting in payments of loans and interest, and neglecting to build the Aberdeen Branch as required in the charter. He urged the enforcement of the penalties of forfeiture of charter, and the seizure of the property. A compromise act was passed in April, 1872, and the debt of the New Orleans road was paid, $213,000 in auditor's warrants, and $81,000 in warrants issued as a subsidy to the Ripley railroad. Treasurer Wasser refused to accept the latter, and later, Governor Powers executed an act of the legislature in aid of the Ship Island road, by transferring to it $110,000 of the auditor's warrants in exchange for first mortgage bonds of the road last named. Eleven miles of the Mississippi Valley & Ship Island road were completed in 1873, in order to draw from the State this subsidy of $110,000, after which the road subsided.

The period following the war was one of renewed enthusiasm in railroad projects. The constitution of 1869, the State being again in a speculative period similar to that of 1835-45, required the legislature to provide for the organization of a Board of Public Works. But a clause was adopted prohibiting the loan of the credit of the State, and the taking of stock in improvement enterprises. The rebuilding of the levees involved some heavy financial transactions. (See Levees.) Many companies were chartered by the legislatures particularly in 1870 and 1871. In the latter year a general railroad act offered $4,000 from the State treasury, for every 25 miles of road constructed by September 1, 1875, by any company that had finished no construction in May. The New Orleans road was authorized to issue bonds to the amount of $3,500,000, and all forfeitures to the State were released on condition that the line should be built from Canton to Kosciusko by January 1, 1872, and to Aberdeen within five years, as required in the original charter. It was also pledged that on such completion, the governor should transfer to the N. O., J. & G. N. company "all the stock owned by said State in any and every railroad company whose road is in whole or in part within this State." Subscriptions to stock by counties and towns, and donations of land were also authorized for various proposed roads. The subsidies granted the Vicksburg & Nashville and Mississippi Valley & Ship Island roads amounted to about $1,000,000. Counties and towns were embarassed by the resulting taxation. Governor Ames urged, in 1875, the revocation of the charters.

A large number of railroad lines were surveyed in 1872 and grading was begun on the following: Memphis & Selma, Mobile & Northwestern, Vicksburg & Ship Island, Vicksburg & Nashville, Prentiss & Bogue Phalia, Natchez, Jackson & Columbus. These projects were dependent almost exclusively on private aid and county subscriptions, some counties voting extravagant subsidies. The Ripley railroad was the only one to qualify for the State subsidy, and received from the treasury, in warrants, $81,968. On the advice of the attorney-general the State treasurer gave notice that he would not receive these warrants in payment of dues to the State, but Governor Powers promised that they would be received for face value on the debt due from the N. O., J. & G. N. company, and thus prevented their repudiation. In 1873 the legislature voted to give the Vicksburg & Nashville railroad, on certain conditions, the trust funds known as the Three per cent, and the Agricultural land scrip, amounting to $320,000, and receive the note of the company secured by first mortgage bonds. In the opinion of Governor Ames it was a pure steal of the trust funds. The company had not completed any of its road in February, 1874, when Ames recommended the repeal of the donation.

Under the old laws the railroads were exempt from taxation until 1874. In the legislature of 1873 there was an attempt to prolong this exemption ten years by smuggling a provision to that effect into an act regarding the Liberty & Woodville railroad. "Aside from having been exempt from taxation," said Governor Powers in 1874, "these companies, with one exception, are now indebted to the State for moneys loaned (Chickasaw and Internal Improvement funds) on which they have for the past eight years been paying no interest." Suit was pending against the Mobile & Ohio. In the summer of 1873 most of the railroads agreed to pay taxes upon a valuation of $5,000 per mile; but the N. O. & M. and M. & O. would not agree to this. No taxes had been paid, early in 1875. The railroads paid taxes in 1875, to the amount of $12,383, which was distributed to the counties. The legislature of 1875 levied a tax of $75 per mile which most of the roads paid, the Mobile & Ohio and a few others, contending for charter exemption. One of the most glaring forms of "graft" of that period must have been with the connivance of the railroad companies, i. e., the payment of commissions to tax collectors on railroad taxes they did not collect. In one case $23,400 commissions for levying and collecting a tax of $600,000 were paid, though not a dollar of the revenue reached the State. (Powers' message, 1873.) The legislature of 1872 and 1873 made provision for selling large areas of forfeited lands along their right of way, to the Vicksburg, Pensacola & Ship Island railroad, later known as M. V. & S. I. and the Memphis & Vicksburg, at two cents an acre, as aid to those enterprises. Many other railroads were similarly favored. The two companies above named made a demand for deeds in 1881, but they were refused by Governor Stone on the ground that the companies had failed to meet the conditions of the laws, and the lands had been disposed of by the abatement laws of 1874 and 1875. In March, 1876, the supreme court affirmed a judgment in favor of the State against the Mobile & Ohio for $397,866; but there was an appeal to the United States supreme court. In the same year there was a similar judgment and appeal in the case brought under the law of 1867 to compel the New Orleans, Mobile & Texas railroad to maintain a drawbridge over Pearl River. The latter was finally decided in favor of the State. Under an act of legislature in 1877, the State settled with the Chicago, St. Louis & New Orleans railroad company, the indebtedness of the Mississippi Central, which was merged in the new company. The company gave its notes for $136,158. An act of 1878 permitted the Mobile & Ohio to compromise its indebtedness to the State and counties, on account of taxes, by the payment of $25,000. The 990 miles of railroad in the State in 1870 were but slightly increased by 1880 (to 1,127) and much of the increase was in narrow gauge roads, notably the Natchez, Jackson & Columbus from Natchez to Martin City, and the Ship Island, Ripley & Kentucky from Middleton, Tenn., to Ripley.

After 1880, mainly in the first five years, there was a great growth of railroads. A statement of the railroad work in 1881-82 noted the purchase of the old Southern road by the Erlanger syndicate, who were building a road from Meridian to New Orleans; the road from Natchez to Jackson was completed; the Chicago, St. Louis & New Orleans had begun a branch to Yazoo City from Jackson; R. T. Wilson, of New York, had begun the building of the line from New Orleans to Memphis, paralleling the river; the old Memphis & Selma had been revived and put under contract. The legislature had extended aid to new roads by exemption from taxation for ten years. There rapidly followed the building of what is now the Yazoo & Mississippi Valley system, and the Aberdeen branch of the New Orleans-Ohio river system, which at this time came under the control of the Illinois Central. Six hundred miles were built in 1882-84. The change in conditions was shown by the paralleling of the river as closely as possible to its banks, whereas 25 years before there had been fierce political battles whether the New Orleans-Chicago line should be permitted west of the Pearl. After years of inanition the once proud "Mississippi Railroad" that was to have joined Natchez and Nashville, managed to revive as a narrow-gauge line. The Grand Gulf & Port Gibson was torn up and abandoned after 1883. The total mileage in the State in 1885 was 1,878, and in 1889, the Georgia Pacific being the main addition, the mileage was 2,366. In more recent years the main addition aside from branches of old lines, has been the Gulf & Ship Island and the Mobile, Jackson & Kansas City, the former providing that outlet to a Mississippi port that was so long sought, and the latter giving the State a fourth north-south system tributary to outside ports.

The mileage reported by the State commission in 1905 is 3,503 miles, an increase over 1903 of 361 miles. The railroad commissioners reported for 1892 that the railroads were assessed at $26,925,000 for taxation, paying a state tax of $134,622. In addition they paid a privilege tax of $20 a mile for first class roads, $15 for second and $10 for third class, and county, municipal and levee taxes also were levied on the valuation assessed. "It will be seen that the railroads now pay a fair proportion of the taxes required for the support of the government." The valuation of railroads for taxation in 1905 were $36,316,800, and of express, telegraph and sleeping car companies $725,000 more. The State tax thereon was $222,000. The privilege tax is $65,000 additional. (See Railroad Commission.) "Section 3560 of the Code of 1892 is intended to prevent the combination of competing lines of railroads. As it stands it is debatable whether it prohibits the purchase of one competing road by another company, if indeed, one company can purchase another road than its own. But one thing is not debatable, that the section does not impose any penalty upon the company that manages, regulates or controls the other company." (Message of Gov. McLaurin, 1898.)

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