AR, M&GN 4/1/1861 P

Annual Report of the Mobile & Great Northern RR
as of April 1, 1861,
President's Report
President and Director's Report
To the Stockholders of the Mobile & Great Northern Railroad Company
   The Directors respectfully submit this their Second Annual Report:
   By referring to the first annual report it will be seen that, at its date, the preliminary surveys of the road were completed, that, arrangements having been made by which it was considered the necessary means for the prosecution of the enterprise could be obtained, contracts were entered into for the materials and construction of the greater part of the road east of the Tensas river, and for the bridging over and west of that river, with the design of having the road, from its junction with the Alabama& Florida Railroad to the Tensas river, in operation early in the summer of 1861, and to the city of Mobile in the latter part of 1862, or early in 1863; and that a respectable force was then actually engaged in the execution of these contracts.
   It will also be remembered that, in the commencement of this successful career in the construction of the road, the Company was threatened with litigation in regard to the validity of the city bonds, which composed a large proportion of their resources. This threatened litigation seriously embarrassed the operations of the Company, and the Directors used every exertion to have the matter decided by the Courts of the country as speedily as possible.
   It was not until late in July, 1860, that this litigation was decided by the Supreme Court. The decision was in favor of the Company upon all points involved, placing the legality of the bonds beyond all question.
   In the meantime, having confidence in the validity of the bonds, the Directors, being anxious that the enterprise should not be delayed, pushed forward the work of local construction with all energy; but, as a matter of prudence, postponed the execution of some of the contracts for the delivery of materials, which involved heavy cash expenditures.
   As soon, however, as the decision of the Supreme Court was obtained, the Directors took immediate steps to prosecute the enterprise with great vigor in all its departments.
   The President went to New York to make arrangements for the future financial and other wants of the Company, and the Chairman of the Executive Committee was despatched to England to see to the proper execution of the contracts made by the Company with Messrs. John Rogerson & Co., of Newcastle-on-Tyne, England, for iron rails and fastenings and for bridge work.
   With the very efficient assistance of H. O. Brewer, Esq., of New York, late of Mobile, the President succeeded in negotiating the sale of a considerable number of the city bonds at par, and in establishing that as their market value. These sales continued until the date of the late Presidential election, quite as rapidly as the Company required the money, and up to that time the construction of the road and the delivery of materials were carried on with energy.
   After the late Presidential election, no further sales of the bonds being practicable, and the state of the country rendering it uncertain to what extent the subscribers to the capital stock would be able to pay the calls for instalments, the Directors, being unwilling to incur obligations which they did not see the means to discharge, called a meeting of the stockholders, and submitted to them a statement of the condition of the enterprise, and of the means required to carry it on.
   At that meeting the stockholders, being informed that it was believed the payment of monthly instalments of 10 per cent. on the subscriptions to the capital stock would, with the other reliable means of the Company, enable the Directors to keep up the forces of construction, and to prosecute the work, so far as to put the road in operation to the Tensas river, nobly resolved to pay these monthly instalments, and instructed the Directors to make the requisite calls.
   Calls for the payment of monthly instalments of 10 per cent. were accordingly made, and, in a short time, it being ascertained that they would, for the most part, be punctually paid, the Directors decided upon continuing the construction of the road, notifying the contractors for the road-bed, however, that in so doing they (the Directors) could only promise that the usual monthly cash payments of eighty per cent. of the work done, promptly made heretofore, would, in future, be settled to the extent of the amounts realized from stockholders, that if the stockholders failed in their payments, the money collected would be divided pro rata among the contractors, and that the 20 per cent. reserved for payment on the completion of contracts, would not probably be paid until some future period, when the bonds could be negotiated.
   No contractor on the road expressing any dissent to this notice, the work of construction was continued, but not with the same vigor as previously, some of the wheel-barrow forces, which could be dismissed without detriment to the contractors, having been withdrawn, and some of the masonry and bridging, not immediately essential, having been postponed.
   In January last the Directors having learned that the Alabama & Florida Railroad Company had received such assistance from the State of Alabama as to ensure the speedy completion of their road between Montgomery and Pensacola beyond a doubt, determined to make all possible efforts to raise the necessary means to place the Mobile & Great Northern Railroad in operation to the Tensas river in time to take off the crop of 1861.
   These efforts the Directors are convinced will be crowned with success, if the stockholders will pay their stock as called for. Under this conviction they are now, and have been since February last, pushing on the work of construction with all the energy and despatch possible, and the Directors, if sustained by the stockholders, mean to continue to do so, until the road is in operation to the Tensas river, both by day and by night, if the labor can be procured. Already a considerable amount of work has been done at night.
   In this connection the Directors would say that they will not permit themselves to doubt the readiness of the stockholders to respond to the calls. So far most of the stockholders have promptly paid up. In a few instances, when stockholders had positively refused to meet the calls, and were in default of the calls before made, legal measures for collection have been resorted to. Some of these delinquent stockholders have since settled. The Directors earnestly hope that no further suits will be necessary. The subscribers to the capital stock of the Company ought to know that the Directors have not only no poser to release them, but are bound in good faith -- to the city -- to the contractors -- and to the paying stockholders, to collect the subscriptions.
   The unpaid subscriptions to the capital stock form, in the absence of ability to negotiate the bonds, much the largest proportion of the available means of the Company, and the stockholders must not, and it is hoped will not, rely too far upon the capacity of the Directors to provide the additional funds that will be wanted, should the stockholders fail to pay promptly.
   The system pursued by the Directors in building the road from the junction to the Tensas river, has been to press the work from the beginning on both ends, to prepare them for the reception of the superstructure, leaving the middle portion of the road to be finished last. Almost all the graduation, masonry and bridging on fifteen miles on the eastern end, and twelve miles on the western end, are completed. Thus about three-fourths of the whole work of local construction required on the road between the Tensas river and the junction is finished. The remainder is in such a state of forwardness that it is believed the entire length of the road bed will be ready for reception of the track in time to permit track-laying to be continued systematically through from both ends without delay.
   For further particulars in regard to the local work of construction, reference is made to the Chief Engineer's report herewith submitted.
   The Directors, fully alive to the importance of having a good quality of rail, required in their contract with Messrs. John Rogerson & Co., that a good rail, equal to the best made in England, should be furnished; and to secure this end, and to supervise the execution of the contract for bridge work with the same parties, the Chairman of the Executive Committee, Lewis Troost, Esq., was, as previously stated, despatched to England immediately after the decision was had as to the validity of the city bonds.
   Mr. Troost did not arrive in England until the latter part of August, at which time two cargoes of rails and fastenings, amounting to 848 tons, had been made and placed on board ship. Taking some rails indiscriminately from a pile remaining from these two shipments, they were submitted to tests which demonstrated them to be excellent as regards strength, elasticity, composition and make.
   From this time until the latter part of November, Mr. Troost was present at the iron works whenever rails were making for this Company, inspecting their manufacture. During this period 716 tons of rails and fastenings (fish bars and bolts) were made and shipped, all of which have been received.
   The rails thus received are of very high quality, properly welded and well shaped. They weigh 60 lbs. to the yard, and are of the form known as the flat-bottom T rail. The fractures of these rails present a section showing a head of very hard, compact, fine-grained iron, and a stem and flange of tough fibrous iron. The tests by blows and pressure to which they were submitted, indicate them to be very strong and elastic.
   The fastenings of the rails consist of fish bars and bolts at the points, and of hook-headed spikes at the intermediate parts.
   The shock given to public confidence by the result of the Presidential election was so great, that the Directors felt bound to advise Messrs. John Rogerson & Co. of the state of affairs in this country, and of their probable inability to pay for the rails according to contract. These advices were received in England in the latter part of November, and from that time shipments of rails were in consequence discontinued. Shortly afterwards John Rogerson, Esq., the principal of the contracting firm, came to this country in company with Mr. Troost, and on the 11th of February last the Directors renewed and modified their contract with his house for 3,168 tons of rails, and the due number of fastenings, the quantity required to finish the superstructure of the road to the Tensas river -- 2,000 tons of rails, &c., to be paid for this spring, and the remainder in January and April, 1862. The latter payments to be secured by hypothecation of an equal amount of city bonds.
   In pursuance of this modified contract, Mr. Rogerson telegraphed to England for 2,000 tons of rails to be sent forthwith. A portion of these rails are now shipped, and the Directors hope soon to hear that the remainder are on their way. The remaining 1168 tons are to be shipped in May next. In the ordinary course of events these rails and fastenings will, without shipwreck, arrive in the times wanted.
   Previous to leaving England Mr. Troost made arrangements with a skilful rail-maker to inspect the manufacture and to test these rails, furnishing him with instructions, which, if carried out, will place the Company in possession of rails of the very first class.
   Referring to the first annual report, it will be noticed that a contract was made also with Messrs. John Rogerson & Co. for the iron cylinders necessary for the piers of the bridges over the Tensas and Mobile rivers.
   Pending the litigation in regard to the bonds, Messrs. John Rogerson & Co., with the sanction of this Company, deemed it best not to proceed with the execution of this contract. After the suit was determined they were notified of the Company's readiness to receive the cylinders and to proceed with the contract. This notice and contract were not complied with in all respects, which released the Company from their obligations to receive the cylinders, and the bonds which had been forwarded to pay in part for the cylinders, are, by agreement with Mr. John Rogerson, to be applied to the part payment of the rails, &c., to be shipped as before mentioned.
   It is fortunate for this Company that the cylinders were not received, as it was impossible, from the unfortunate condition of the country, to carry through, as intended, the construction of the road between the east bank of the Tensas river and Mobile. The cylinders, if shipped and received, must necessarily have been settled for if possible, which would have seriously increased the difficulties of the Company, not only without any adequate advantage, but, on the contrary, with the disadvantage of causing a loss of interest upon the large amount invested in the cylinders during the time they could be of no service.
   In the expectation that the cylinders would have arrived in due time, the Company purchased and paid for the greater part of the machinery necessary to sink them, and ordered an air-lock to be used for the same purpose. This order was, however, countermanded in November last.
   The work from the east bank of the Tensas river to Mobile will involve a very large expenditure of money. The present Directors, if they continue in the management of the enterprise, propose to enter upon the execution of this work at the very earliest date that they see it is practicable to meet the required expenses. The Directors recognize to the fullest extent the obligation of this Company to extend the road into the city as speedily as possible, having due reference to the best interests of the Company and of the city of Mobile. They are unwilling, however, to embark in any undertaking without a fair prospect of being able to meet their obligations. The policy of this course will be recognized by every reflecting person. Up to this time every claim against the Company has been promptly adjusted and paid. No creditor has been permitted to come a second time for his money. The result is, the road between the junction and the east bank of the Tensas river is far advanced towards completion under the estimates, as will be seen by referring to the Chief Engineers's report, and the credit of the Company, notwithstanding the critical times, is unimpaired.
Total Receipts and Expenditures
The receipts to date of last Annual Statement April 2d, 1860, were $116,310.40
   The report of the Treasurer, herewith submitted, shows that the receipts during the fiscal year, ending April 1st, 1861, were as follows, viz:
From instalments on stock $142,260.48
City Bonds 266,000.00
Interest on bonds 68,566.86
Interest account 312.81
Bills payable 3,000.00
Bills receivable 2,500.00
* Sale of iron rails 981.14
Insurance on cement lost 500.00 $484,121.29
     Total receipts up to April 1st, 1861 $600,431.69
   * These sales were for the remainder of a lot of iron rails, purchased in New Orleans to facilitate the construction of the road, left there and not wanted.
   The total expenditures during the same period have been as follows viz:
Total to date of First Annual Statement, April 2d, 1860 $84,230.16
For Engineering expenses (preliminary surveys) $1,500.00
      Instruments and equipments (location and construction) 238.44
      Engineering expenses (location and construction) 12,770.02
      Negroes 61,952.20
      Overseeing and subsistence of negroes, horses, and mules, for construction  11,725.89
      Stock and implements and machines for construction 7,855.53
      Advanced to contractors and bills receivable 25,225.81
Grubbing and Clearing 10,231.26
Grading 156,526.28
Masonry 38,191.19
Bridging 9,794.17
Foundations 12,582.50 Road-bed 227,325.40
Iron rails 79,269.63
Fastenings 15,273.13
Cross-ties 12,138.53
Track-laying 643.50
Road-crossings and fencing 229.39 Superstructure 107,554.18
Rolling stock 21,807.83
Depots, Stations &c 187.42
Real estate and right of way 1,387.25
Wharf 644.76
General expenses 10,627.47
Interest and commissions 1,078.58
Attorneys' fees and expenses of litigation 13,105.35
Expenditures for this fiscal year, ending April 1st, 1861 504.986.13
Total expenditures up to April 1st, 1861 $589,216.29
Cash inn hands of Treasurer, April 1st, 1861 11,215.40
   In the statement of Expenditures it will be observed that $61,952.20 have been paid this fiscal year for negroes, making with the purchases of last year the sum of $118,401.90 invested by this Company in negro property. Of the force thus purchased two are dead, viz: Solomon, a faithful man, and Charles, who was shot and killed, while runaway, by some unknown person. Steps have been taken to investigate this affair with the view of a criminal prosecution, and a recovery also of the value of the negro.
   The Company's force now consists of 70 men, 11 women and 4 boys. Full information in regard to the manner in which this force has been employed, and the results, are given in the accompanying Chief Engineer's report.
   It will be seen by the Treasurer's report that 266 of the city bonds have been realized since the last report. Of these 15 became due on the 1st of January last, and were redeemed by the city; the remainder were sold at par, the company receiving the accruing interest to the date of sale.
   According to the last annual report, 79 bonds were sold up to its date. The Company now hold, therefore, 655 bonds. Of these 72 are to be paid to Messrs. John Rogerson & Co. for rails and fasteners, leaving in the hands of the Company 583 bonds, after paying for the rails, &c.
   These bonds and the unpaid stock, $167,393.52, constitute the present resources of the Company.
   The Directors, upon careful consideration, have thought it most advisable to endeavor to contract with responsible parties familiar with the management of steamboats, for the transportation of freight and passengers from the east bank of the Tensas river to the city of Mobile. The Chief Engineer is now advertising for proposals for such a contract. It is hoped that some suitable party will come forward with offers such as the Directors may deem advantageous for the Company to accept. Otherwise arrangements will have to be made during the summer for this business to be done by the Company itself. The Directors do not intend to establish a depot on the east bank of the Tensas river.
   The Directors have made a favorable contract with the American Telegraph Company for a telegraph upon the road. That Company has in consequence established a telegraph line on the road, which is now in operation.
   The Directors have thus given a general statement of their operations and of the affairs of the Company. It can now be hardly doubted, from the progress heretofore made, that had the Directors been permitted to prosecute the enterprise from the beginning, without the embarrassments of litigation, all the bonds could have been negotiated last spring on terms favorable to the Company, all the rails and bridge materials would have been delivered in season, and the work of construction would have been so pressed forward that the road could have been running to the Tensas river early in this summer, and to the city by the latter part of 1862, or early in 1863.
   The consequences would have been that the road would at an early date have been in operation, and in the receipt of an income which would soon have relieved the city from the payment of the railroad taxes, and the Company would not have been compelled to incur expenses for litigation, which, as will be seen in the statement of expenditures, have been by no means light.
   In conclusion, the Directors are pleased to be able to inform the stockholders that the present state of the work and the financial condition of the Company, authorize them to announce that, if the monthly calls for stock are punctually paid, the line will be, notwithstanding the many difficulties encountered, in operation to the Tensas river by railroad, and thence to the city of Mobile by steamboat, in the month of September next, unless prevented by a shipwreck of rails, or some other interposition out of the control of the Directors.
Wm. D. Dunn
Office of the Mobile & Great Northern Railroad Company
Mobile, April 3d, 1861