AR, M&O 4/1/1863 P

Annual Report of the Mobile & Ohio RR
as of April 1, 1863,
President's Report
Fifteenth Annual Meeting of the Stockholders of the
Mobile & Ohio Rail Road Co.
Held in Mobile, April 21, 1863
To the Stockholders of the Mobile & Ohio Rail Road Company
   The President and Directors of your Company present the following Report of their proceedings for the past year:
   The earnings and receipts of the Road for the past year (1862) amount to two million six hundred and seventy-one thousand six hundred and sixty-two dollars and twenty-one cents. The cost of running the Road, (including the loss and depreciation of engines, cars and rails, and also the cost of engine house and station buildings, and a reasonable estimate of unadjusted claims for lost freight) amounts to one million two hundred and ninety-one thousand seven hundred and fifty-five dollars and seventy-six cents, leaving a nett income of one million three hundred and seventy-nine thousand nine hundred and six dollars and forty-five cents ($1,379,906.45).
   Of this amount, there was earned in the State of Alabama two hundred and seventy-six thousand five hundred and forty-six dollars ($276,546), and the balance was earned on the Road in the States of Mississippi, Tennessee and Kentucky.
   By reference to statement B, in the annexed tables, it will be seen that our floating debt has been reduced two hundred and three thousand seven hundred and sixty-eight dollars and ninety-eight cents ($203,768.98).
   The floating debt remaining includes a debt to the State of Mississippi not yet due of $220,865.82. This we have offered to pay, but the Governor entertaining doubts as to his right to receive it before maturity, has not yet consented to accept payment. It also includes the amount of change bills issued by the Company under the authority granted by the State of Mississippi. The law allows the issuance of $300,000, but only $116,071.40 has been issued, a part of which has been redeemed. The remainder of the floating debt, except small amounts on pay rolls, &c., is made up of foreign debts held by parties in the United States and in England, which have not been presented for payment, and in the present condition of the country are not accessible. The debts owing to parties in the United States have been attached by the Confederate authorities under the confiscation laws, but as they are due on bills payable, they may have passed into other hands, in due course of trade, and therefore no judgments can be rendered on them. But for these difficulties in the way, these foreign debts would have been taken up, as we have paid every indebtedness within our reach, where creditors have been willing to receive payment, whether the debts have been due or not.
   We now have (April 1, 1863) in our possession, or at our command, the following assets:
Sterling Bonds redeemed from hypothication, but not delivered up $100,000
Sterling Bonds in hand 662,000
     Making $762,000
Bonds of the State of Alabama 125,000
Confederate Bonds 308,000
Confederate Bonds due from the Government for earnings prior to 1st January, 1863 282,000
Gainesville Branch Bonds 30,000
Confederate interest bearing Notes 240,000
Confederate Notes (not interest bearing) 336,000
Bonds of the State of Tennessee, subject to a lien to save our sureties on Custom House Bonds and other liabilities in Kentucky harmless on liabilities of thirty thousand dollars and interest   197,000
Columbus, Kentucky, Bonds 28,700
     Making $2,308,700
   These securities, held as assets by the Company, excepting the Sterling Bonds, Tennessee Bonds, and the cash balance on hand, are drawing an annual interest in favor of the Company of $77,120. This meets a corresponding amount of accruing interest on our outstanding liabilities.
   The $240,000 of interest-bearing notes above referred to is included in statement A, of the annexed tables, as part of the cash balance. It is referred to here separately, to show the amount of interest accruing annually to the Company on assets in their hands.
   The accumulation of these assets in the hands of the Company has been the result of several causes. 1. Our floating liabilities, as already explained, have been chiefly in hands beyond our reach. 2. The holders of our income bonds have neglected or refused to present them for payment, preferring to hold them rather than receive the money, the bonds being above par. These bonds pass by delivery like bank notes, and we can't know in whose hands they are. 3. It has been, and is, important for us to purchase rails and fastenings and Rolling Stock to replace such as have become defective or have been lost or destroyed, but in the condition of the country it has been and still is impossible to get them. Had our bills payable and Bonds been presented for payment, and the blockade been removed so as to allow the purchase of rails and other materials for the repair of the Road, a large portion of this fund would have been absorbed. The best we could do under the circumstances has been to put as much of it as possible in an interest bearing form, to meet a corresponding amount of interest accruing against us, and at the same time keep the fund in a condition to meet our Bills payable and Bonds whenever presented, and provide for the purchase of Rails and other materials for repairs as soon as they can be had.
   In addition to the assets above referred to, we have on hand two thousand and fifty-five bales of cotton, purchased at a cost of $156,849.74. This cotton is vested in Messrs. George Peabody & Co., London, as trustees, for the benefit of our English creditors, to be sent forward as soon as the blockade will permit. We have also purchased sixty negroes, now in the service of the Road, at a cost of $98,500, and expect to increase the number to one hundred, if they can be had at reasonable prices, and of good quality.
   Three Trustees were originally appointed under our Deed of Mortgage to secure the payment of our Sterling Bonds. On these Trustees devolved the duty of directing the sales of lands, and the making of deeds for title. Two of them died, and the remaining Trustee wholly failed to do his duty, greatly embarrassing the Company in the sale of lands. This difficulty is at last removed, by a decree in Chancery, removing the delinquent Trustee from office, and appointing Charles Walsh, of Alabama, George H. Young, of Mississippi, and Alexander Jackson, of Tennessee, Trustees under said Mortgage. The high character of these gentlemen gives full assurance that no further trouble need be apprehended.
   By the sales of lands heretofore made, two hundred and eight thousand dollars of our Sterling Bonds have been taken up and are held ready to be cancelled. And we may safely expect our lands, under proper management, to furnish important aid in establishing a Sinking Fund to reduce and finally liquidate our funded debt. A small portion of the earnings of the Road annually added to the sales of lands, will put our Sterling Bonds in course of gradual liquidation, and take them up at or before maturity.
   It has been shown by previous reports that the Road has been built at the lowest possible cost, the work having been done at the lowest prices, and no material sacrifices made in the sale of Bonds or otherwise. Few Roads are equal to it in the quality of its rails and fastenings, and the substantial manner of its construction; and none equal to it has been built at less cost per mile. It has been built in part by amounts paid by Stockholders; in part by its own earnings which have gone into the cost of construction, and the remainder from the proceeds of Bonds negotiated, which make up what is called our funded debt. Our lands formed an important part of the basis of credit on which these Bonds were sold, and are destined to render still more important services in their liquidation. Whatever benefit is derived from these lands is a bonus to the Stockholders, taking the place of that much Stock which must otherwise have been subscribed and paid in before the Road could have been built.
   These considerations account for the extraordinary fact developed in the completion of this great enterprise -- that while the Road has been built at the lowest possible cost, the lands and the earnings have enabled us to complete the work with a Stock list of less than one-half of the actual value of the Road. A most important fact to be considered in estimating the prospective value of the Stock.
   By a resolution of the Board, passed 1st October last, it was ordered that interest to be paid in Stock should be allowed on Stock from the several dates of payment up to the completion of the Road, on the 22d of April, 1861, and that the Stock certificates should issue for the interest as well as the amount paid. Some Stockholders had paid their subscriptions long before others, and it was proper to allow interest, in order to put them on an equal footing. These certificates are being issued as fast as possible.
   By the Report of the Chief Engineer and General Superintendent, it will be seen that we need Rails and other materials for the repairs of the Road, and also additional buildings at Whistler. To these and other important suggestions made in his Report, special attention is invited. It is of great importance that the Road should be kept in the best condition possible, and that Rails and other materials for repairs should be purchased as early as they can be had, and that a sufficient fund should be reserved for that purpose.
   In conclusion, we desire to say that, after a careful review of the condition of the Company's assets and income, we recommend to the Board you may elect at your meeting, to declare a dividend of six percent. on the Capital Stock of the Company, payable on and after the fifteenth of June next.
All of which is respectfully submitted,
Milton Brown, President
Mobile & Ohio Railroad Company