The Gulf, Mobile and Ohio
By James H. Lemly

 

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CHAPTER   XXI

The New Orleans Great Northern

Railroad Company - 1905-33

 

 

GMO meets NOGN, Jackson, Miss, 1927THE New Orleans Great Northern, like the Meridian and Memphis, the Jackson and Eastern, most of the Gulf, Mobile and Northern, and countless other segments of railroads in Mississippi, was built for the primary, purpose of serving as a lumber hauling road.   There was one great difference, however, between the New Orleans Great Northern and most of these other “logging” roads.   The “Nogan” as it was popularly called, was planned, engineered, and built to be a permanent railroad, and its backers seldom had great difficulty in raising funds for construction.  The primary reason for this difference was the background of the group which planned and built the New Orleans Great Northern.  Most of the other roads which were built in Mississippi in the timber regions were promoted and at least partially developed by Southerners of very limited means.  These men often hired engineers from other sections, and they eagerly sought financial support from Eastern and Northern capitalists, but control generally rested with local groups during the early rears of these roads.

In contrast, the New Orleans Great Northern was developed by a group of wealthy Yankee lumbermen who began their operations in the Mississippi timber regions after 1900.  This group, led by F. H. and C. W. Goodyear, of Buffalo, New York, purchased a tremendous amount of standing timber in the southwestern part of Mississippi and adjacent areas of Louisiana.  Their plan was to erect a large-scale sawmill somewhere in the vicinity of their holdings and to process their timber at this central point.  Since there was no railroad through much of their holdings, the group, of necessity, had to build a line to haul their timber to the mill and the lumber to market.  After extensive study, the group decided to build the Great Southern Lumber Company at the site of what is now the city of Bogalusa, Louisiana.  The town was built alongside Bogue Lusa Creek and thus received its unusual name.  There was no town, lumber mill, or railroad when the project started, so all three essentials to this operation were begun at about the same time.  The plan called for a town to house 8,000 people, a mill to manufacture a million feet of lumber each day, and a railroad some 200 or more miles long to run between New Orleans and Jackson, Mississippi by way of Bogalusa.

Construction of the New Orleans Great Northern was delegated to the Crescent City Construction Company, which was owned by the owners of the Great Southern Lumber Company.  Although the road’s primary purpose was to haul timber for the lumber company, it was designed from the first as a common carrier and as a permanent line.  Standards much higher than those for log lines were set and in general were lived up to.  Proof of this is to be found in the statement made by Coverdale and Colpitts in 1938 that the Louisiana Division (New Orleans Great Northern) was the best roadbed in the entire GM&N-Mobile and Ohio territory.

The New Orleans Great Northern Railroad Company was incorporated under Louisiana law on January 27, 1905.  A sister concern, the New Orleans Great Northern Railroad Company of Mississippi, was incorporated on May 9, 1905, and the two companies were merged into one under the Louisiana charter on August 6, 1906.

On June 1, 1905, the New Orleans Great Northern bought the East Louisiana Railroad, which had been incorporated on July 8, 1887 to buy, build, or operate a railroad in certain sections of Louisiana and Mississippi.’ This line had been started by a group of local businessmen whose principal purpose was to open up the timber reserves in the area north of Lake Pontchartrain.  The principal properties of the East Louisiana were acquired from the Poitevant and Favre Lumber Company of Mandeville, Louisiana, which had built a log road from Florenville, Louisiana, to a point on West Pearl River near the present town of Pearl River, Louisiana.

In 1903 the East Louisiana Railroad operated 24 miles of main line between Covington, Abita Springs, and West Pearl River, at which point timber was dumped into the river to be floated down-stream to mills at Pearlington, Mississippi.  The road also operated into New Orleans over the tracks of the New Orleans and Northeastern under lease agreements.  In addition there was a 12-mile branch which ran from Mandeville junction on the main line down to the town of Mandeville on Lake Pontchartrain.  At one time the East Louisiana had operated a ferry service from Mandeville across to New Orleans, but this operation was given up in 1896.  The East Louisiana also operated about 12 miles of sawmill spur lines.  According to the report of the East Louisiana to the Interstate Commerce Commission in 1903, the road had 4 locomotives, 12 passenger cars, 28 freight cars, and 4 service cars.  The line hauled 693,639 ton-miles of freight an average of 11 miles at an average price of 5.99 cents per ton-mile.  Forest products amounted to 65 per cent of the total tonnage moved.

During the years from 1903 to 1905 the East Louisiana built a 13-mile addition to its lines which ran from Covington to Folsom, Louisiana.  Thus, on June 1, 1905, when the New Orleans Great Northern bought the East Louisiana, it had about 50 miles of main lines with a dozen miles of spur tracks to sawmill sites.  The East Louisiana had no bonds outstanding, and its capital stock in 1903 totaled $340,300.  The road had been given about $10,000 in bonus payments by various lumber concerns to help pay for construction.  The town of Franklinton, Louisiana, had raised a contribution of a little over $400 from its citizens, even through the road never was built that far north.  The citizens of Covington and Mandeville had imposed a special 10-year tax on their communities which eventually paid the road a total of about $9,100 as an aid in meeting the costs of construction.

The New Orleans Great Northern bought the East Louisiana by exchanging its stock and bonds for the smaller road.  The East Louisiana was purchased because of its valuable lumber connections and because its charter rights enabled it to build into areas which the New Orleans Great Northern hoped to serve.  By the purchase, the New Orleans Great Northern secured valuable tonnage and also forestalled possible future conflict as to which road should serve the territory in question.

The New Orleans Great Northern engineers did not take long to decide that they had no interest in bridging Lake Pontchartrain and constructing another entry into New Orleans.  Accordingly, new arrangements similar to the East Louisiana plan were developed, by which the New Orleans North Eastern line from Slidell, Louisiana to New Orleans would be used by the New Orleans Great Northern.  Thus construction began at Slidell and proceeded northward toward Bogalusa where the Great Southern Lumber Company mill was under construction.  At the same time another line was started, which was to run from Tylertown, Mississippi, through Franklinton, Louisiana, and then was to curve to the southeast almost paralleling the Bogue Chitto River.  This is the branch line which now joins the main line of the GM&O at Rio, Louisiana.

The 36 miles of line from Slidell to Bogalusa were completed in 1906, and service was begun to that point as soon as possible.  The report of the New Orleans Great Northern to the Interstate Commerce Commission as of June 30, 1907, showed this 36 miles in operation as the only addition to the lines bought from the East Louisiana.  The report did state, however, that some 36 miles of line had been built from Bogalusa to near Columbia, Mississippi, that 32 miles of the line out from Rio had been built, and that 15 miles of a new line from Slidell to Mandeville and up toward Covington was under construction.

The New Orleans Great Northern experienced many of the same construction problems which have continually plagued most railroad builders.  It was not possible to keep to construction schedules which had been optimistically projected when the task was begun.  Not until June 30, 1910, was the New Orleans Great Northern able to report to the Commission that its other mileage was put into service.  In the year from July 1, 1909, to June 30, 1910, the road inaugurated service on 185 miles of new line.  This included the 114 miles from Bogalusa to Jackson (actually Nogan), Mississippi, 41 miles from Rio, Louisiana, to Tylertown, Mississippi, 27 miles from North Slidell, Louisiana, to Abita Springs, Louisiana, and 2 1/2 miles from West Columbia to Columbia, Mississippi.  From Nogan, Mississippi to Jackson, a distance of 4 1/2 miles, the line of the Illinois Central was to be used under a trackage agreement.  Terminal facilities of the IC in Jackson were to be used under lease also.

The beginning of through service from Bogalusa to Jackson brought drastic changes in rates charged by the New Orleans Great Northern, as well as great increases in tonnage hauled.  In 1909 the New Orleans Great Northern moved 13,245,548 ton miles of freight an average of 41 miles at an average charge of 2.86 cents per ton mile.  In 1910, the road moved 59,932,045 ton-miles an average of 77 Miles and collected 1.78 cents per ton-mile.  In 1909 the average train contained 20 cars, 14 of which were loaded with a total of 216 tons per train or about 16 tons per car.  These averages increased in 1910 to 23 cars per freight train with a total of 262 tons per train or about 19 tons per car.

When construction work on the New Orleans Great Northern ceased, the road showed 243 miles of owned main track which had been built and equipped at an average charge of $64,424 per mile.  Of this, $30,352 was in common stock, $32,072 was in 5 per cent bonds, and the remainder was in equipment obligations and short-term notes.  The company had outstanding $7,500,000 in stock, of which Crescent City Construction Company owned $6,870,000.  The line had 181 miles of 85-pound rail, 41 miles of 70-pound rail, and 21 miles of 60-pound rail.  The road operated some 35 miles of main track under lease agreements.  This was the mileage from Slidell to New Orleans and from Nogan to Jackson, Mississippi.

In the years immediately, following completion of construction, the New Orleans Great Northern found that much still needed to be done to make its line really fit for efficient operation.  Trouble developed with some poorly built bridges, and parts of the track work had to be done over.  Creosoted timbers were found to be greatly superior to untreated pine and eventually, had to be substituted in much of the line.  In the main, however, the construction work on the New Orleans Great Northern was far superior to that on many lines built in Mississippi at or near the same time.  Evidence of this is to be found in the annual report to the stockholders for the year ending June 30, 1912.  The.  report stated that traffic had been greatly affected by the tremendous amount of rainfall which Mississippi had experienced in tire months from June 30.  The territory served by the New Orleans Great Northern had received 89 inches of rain in seven months.  This was about 13 inches per month in territory which normally receives about 5 inches per month.  The annual report stated: “This condition affected seriously, the freight and passenger traffic.  The country roads were impassable at times and the logging and lumber industry was almost totally, suspended for several periods of considerable duration.” The report did not set out any specific damage that these rains had done to the tracks or roadbed of the company, which indicates that the line suffered no major destruction.  In a similar period, the GM&N line was practically destroyed in places and was out of service in several instances.

During the years following the completion of the road, the management of the company showed much interest in the development of the cut over lands of the region.  The road reported great improvements in farming and vegetable production in its territory.  Dairying was pushed as a means of turning the bare lands back to productive use.  In conjunction with the Great Southern Lumber Company the New Orleans Great Northern announced that new uses had been found for sawmill refuse in the making of paper box board.

One of the problems which plagued the New Orleans Great Northern management during the years prior to World War I was a perennial car shortage, on the line.  Most of its business was originated on its lines by the lumber mills of the area.  As comparatively little tonnage was shipped into the area, however, few freight cars tended to “come home” naturally.  The New Orleans Great Northern was in a constant struggle to get the IC and other connecting lines to send empty cars back to the territory so they could be refilled and once more make the trip north or east to market.  This condition be-came such a problem during the early years of World War I that the New Orleans Great Northern almost seemed glad to see the Director General of Railroads take control of the New Orleans Great Northern.  A federal manager presumably could make other roads release freight cars to the smaller line.

During the war years the New Orleans Great Northern was operated by the same federal manager who controlled the IC system.  Under these circumstances, it was fortunate for the New Orleans Great Northern that its lumber was in such great demand, or its business might have been neglected in much the same manner as was that of the GM&N

After the close of World War I, the New Orleans Great Northern suffered a slump in passenger traffic much as its sister roads experienced.  Fortunately its freight business increased when the postwar depression was over, and its business continued “good” for a number of years due in large measure to the building boom which the country experienced in the decade of the 1920.

The New Orleans Great Northern began to purchase heavier locomotives and to operate heavier trains in the postwar years in much the same pattern as the GM&N Two of the Mikado type decapods were bought from the federal government, which helped to increase operating efficiency on the line.  Net tons per freight train went up steadily: 336 in 1920, 429 in 1921, 530 in 1922, 587 in 1923.12 At this point the net ton figure tended to level off, but the change from 336 tons in 1920 to 587 by 1924 was nothing short of phenomenal.  The increase was much more rapid than the similar movement upward on the Gulf, Mobile and Northern although the upward climb on the Gulf, Mobile and Northern was of longer duration.

The New Orleans Great Northern began early use of gasoline-powered cars to replace steam passenger trains along its lines in the first years of the 1920’s.  The annual report for the year ending December 31, 1924, stated that motor coach No.  2 had been placed in service between Bogalusa and Tylertown and that the road expected to save about $13,000 per year over steam train service.  The following year a similar motor train was put in service between Bogalusa and Jackson.

1926 was the year in which the New Orleans Great Northern reached its preferential traffic agreement with the GM&N and the Chicago, Burlington and Quincy.  Immediately after this agreement was made, the New Orleans Great Northern began to build its own line from Nogan into Jackson, Mississippi, and to rework all of its main line south to Slidell in anticipation of the increased flow of traffic.  The company, in conjunction with the GM&N and the Burlington, opened outside traffic offices to solicit business over the new route which was opened for service on July 17, 1927.  The New Orleans Great Northern was no longer at the mercy of the IC on its northbound freight.  Its founders, too, had dreamed of a new north-south line from Chicago to the Gulf, and this arrangement finally made it possible.

The through-haul business which the Burlington-GM&N agreement gave the New Orleans Great Northern was of great benefit to the road.  Timber and lumber tonnage was to decline after 1926, and the road sorely needed other traffic to help keep revenues up to a satisfactory level.  In 1927 the New Orleans Great Northern managed to show an increase in total tonnage, but its net income declined due to the loss in timber traffic.  The road’s net income in 1927 was $34,000 less than in 1926.  Certainly the decline would have been much greater if the GM&N-Burlington-New Orleans Great Northern agreement had not been in effect for part of the year.

Unfortunately for the New Orleans Great Northern, its income for 1926 was higher than the road was ever to experience again.  Net in-come in 1928 was $129,000, and in 1929 the company showed a deficit of $83,000.  The territory which was served by the New Orleans Great Northern could not provide tonnage to replace the decline in timber production, and through-haul business in itself was not yet sufficient to maintain the road.  When the national building boom began to abate after 1926, this region and the New Orleans Great Northern were very severely hit.

In spite of the decline in the fortunes of the New Orleans Great Northern, its line to New Orleans was vital to the future of the GM&N-Burlington traffic agreement.  To protect this interest, the GM&N in 1929 proposed to assume operating control of the New Orleans Great Northern through a stock exchange agreement.  The plan called for joint operation, with the officers of the GM&N in charge of both lines.  The New Orleans Great Northern, however, was to remain as a separate corporation.  New Orleans Great Northern stock was to be exchanged for GM&N stock on a ratio of 1 share of GM&N for each 2 3/4 shares of New Orleans Great Northern stock turned in.  This proposal was submitted to the stockholders of the New Orleans Great Northern in October, 1929, and became effective on December 30, 1929, because a large majority of the stockholders agreed to the exchange.  By February 15, 1930, 91 per cent of all New Orleans Great Northern stock had been exchanged under the plan.

As a result of this transaction, Mr. Tigrett became executive vice-president of the New Orleans Great Northern, and the offices were consolidated in Mobile during the year 1930.  This move was too late to effect major economies during the year, however, and the New Orleans Great Northern ended 1930 with a deficit of $185,000 in spite of the fact that no salaries were paid to the new top officials.

1931 brought some relief to the hard-pressed New Orleans Great Northern, but the company still had a deficit of $23,000.  Unfortunately this “good” showing could not be continued in 1932 and the net deficit for this worst depression year was $373,000.  In the early months of 1932 it was apparent to all concerned that the New Orleans Great Northern could not continue to carry its heavy bonded debt on its expected revenues.  At a meeting of the Directors of the GM&N in January, Mr. Tigrett had announced that a scaling down of the bonded indebtedness of the New Orleans Great Northern would be necessary if conditions did not improve.   There definitely was no improvement of conditions, and on August 1, 1932, the New Orleans Great Northern defaulted on its bond interest payments.  A receivership was established by the courts on November 7, 1932, and Mr. Tigrett was named receiver.  Since all parties at interest realized this step was inevitable, there was no opposition to the receivership, and no major difficulties were encountered during the reorganization which followed.

The plan of reorganization was developed before the default on the bonds took place.  A bondholders’ committee had been set up in the spring of 1932, and this group announced its plan of reorganization on July 1, a full month before the default.  The plan was amended in March, 1933, and this was the actual basis for the reorganization.  Under the amendments, holders of each $1,000 bond in the old company were to receive a $500 bond from the new company, plus a $500 income debenture and a share of stock.  The fixed obligations were cut in half, and all old stock was wiped out.  Control of the new company would rest with the bondholders, since the only stock to be issued was the 824,800 shares to go with each new $500 bond.  Under this plan the GM&N lost its stock equity, which it had purchased in 1929-30 at a book value of $2,588,890.

The plan of reorganization set up a new company, the New Orleans Great Northern Railway Company.  The new company was to issue $843,000 of its bonds to the Gulf, Mobile and Northern Railroad Company of Louisiana in payment of the purchase price of that company’s property.  The property consisted of the Canal Yards and connecting facilities in the New Orleans area which has been built in 1930-31 for the use of the New Orleans Great Northern.

The New Orleans Great Northern Railway Company was to be leased for 99 years to the GM&N, effective the day the new company assumed control of the property.  This allowed continuous operation of the joint properties, for the foreclosure sale was held June 29, 1933, and the lease became effective July 1, although it was not until August 1 that all legal hurdles had been cleared away and the Interstate Commerce Commission gave its approval to the entire transition.  Under the terms of the lease, the GM&N was to pay interest at 5 per cent on the new first mortgage bonds of the Railway Company and also was to pay contingent interest of 5 per cent on the debentures if and when the GM&N paid dividends on its own capital stock.  In addition, the GM&N was to pay all current charges and expenses against the leased properties as well as current expenses of the Railway Company, and it was to maintain roads tracks, buildings, and fixtures at an adequate standard.  With the execution of this lease, the New Orleans Great Northern properties became in effect an integral part of the GM&N, and its history ceased to be of general interest.  Only its corporate entity was kept alive as custodian of legal title to the property.  Since July 1, 1933, all operating and control functions of the Louisiana Division have been exercised by the GM&N and the Gulf, Mobile and Ohio.

 

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