| Financially, it was not feast and famine – it was
hunger, famine, and starvation. |
| |
| Immediately after succession, business activity
throughout the South came to a near halt. Uncertainty about possible
trading barriers, unsettled financial questions, and general fear of the
unknown caused most activity to stop, and with it, most rail shipments
stopped. This translated into reductions of income of some 25% compared
to the previous year. The railroads, unable to see the future, laid off
a large portion of their work force. These laid off men quickly,
patriotically, joined army units and were mostly lost to the railroads
for the remainder of the war. |
| |
| After Ft. Sumter, mobilization caused a huge
increase in traffic, but little increase in revenue since the railroads
choose to carry this traffic for free. By summer, it was clear that the
railroads would have to charge the government for shipments. In another
patriotic move, the railroads agreed to charge at a lesser rate than
commercial shippers were charged. These rates were raised several times,
but never provided the income needed to allow the railroads to maintain
themselves. |
| |
| The railroads now fought several problems at the
same time: |
- Much
of what the government paid them was paid in government bonds, which
the railroads’ suppliers would not accept as payment
- To
increase income to meet needs and cover for the 50% discount the
government received, it was necessary to devote a considerable
amount of space and effort to moving non-government goods and
people. This non-government traffic was strongly resented by the
government, but it was the government policies that made it
necessary. Also, much of this non-government traffic was the
movement of goods to war material suppliers (i.e. iron straps to
canteen makers).
- Most
railroad supplies could not be had in the South, at any price. The
government would not buy supplies in Europe for the railroads and
would not provide preference in blockade running for the supplies
that the railroads bought on their own.
- Confederate
money paid to shareholders was paid out of phantom earnings. The
money was not spent on new equipment or maintenance because the
required materials were not available. Money was not spent on wages
because enough workers could not be found to maintain the track,
equipment, and right of way, primarily because of conscription.
|
| The railroads were aware that their apparent
prosperity was false. Several annual reports warn the stockholders that
the dividend paid would have been used to keep the road and equipment in
better condition, if the required supplies could have been found at any
price. At least one road printed that the stockholders would loose less
money if the road shut down than if it continued making such a
“profit” because the road and equipment would stop deteriorating if
the traffic stopped. |
| |
| From the fall of 1864 until the war ended, the
South’s railroads were devastated by Union military activity.
Sherman’s march through Georgia, South Carolina, and part of North
Carolina is the best-known destructive force, but raids into western
Virginia, western North Carolina, eastern North Carolina and eastern
Alabama destroyed a
great deal of property and equipment. Confederate destruction in the
face of Union advances added to the losses. |
| |
| At the end of the war, most Southern railroads were
essentially bankrupt. The assets they held were worthless Confederate
bonds, unpaid Confederate government bills, worn out track, rotted ties,
exhausted and damaged locomotives, worn out rolling stock, and burned
out stations, shops and bridges. Their liabilities were plain – the
need to refurbish or replace almost all of their property while paying
the interest on pre-war bonds using income derived from a devastated
economy. The result was a complete restructuring of the Southern
railroad picture during the 10 years after the close of the fighting as
northern money bought up and consolidated the weak and bankrupt Southern
roads. |
|