The Gulf, Mobile and Northern and Its
Predecessors - 1871-1920
1930, Tom Martin, then editor of the Gulf, Mobile and Northern News,
described the growth of the line he worked for in these words: “The
story of the Gulf, Mobile and Northern Railroad is the story of the
post-war South - of small and difficult beginnings undertaken by men of
courage and of vision, of many vicissitudes; but of progress in the face
of apparently insuperable difficulties.”
In 1930 it could be said that the GM&N truly had made
progress. In 1920
such a statement might have been open to question.
No one, however, could ever question that part of Martin’s
statement about small and difficult beginnings, for no railroad could
have had a much more difficult start than the pieces of lines which by
1920 had been merged into the GM&N.
first successful start on one of the sectors of the GM&N of 1920 was
made in the hilly farm region of north central Mississippi in 1871.
Colonel William C. Falkner, late of the Confederate Army, had
returned to his prewar home of Ripley, Mississippi, with a reputation
for military daring and fast action but little else.
Like his neighbors, Falkner had lost heavily in the collapse of
the South, and since he was a lawyer by profession, he had little hope
of recouping his fortunes by trying cases for destitute friends.
When he was not occupied with his legal duties, Falkner turned to
writing, with some success and profit.
One novel, The White Rose of Memphis, brought
sectional fame to the Colonel and provided him with a desirable source
of income. However, he
never acquired the literary skill or the fame which has recently come to
his Nobel Prize-winning grandson and namesake, William Faulkner, of
Oxford, Mississippi. At
some point in the year 1868, Falkner apparently decided that there would
be more profit to himself and to his neighbors in more prosaic pursuits,
so he determined to try his hand at promoting and building a railroad
for his home town.
goods destined for Ripley had to be transported overland by wagon from
Saulsbury, Tennessee, a station on the Memphis and Charleston Railroad.
All outbound freight had to be transported in the same cumbersome
manner, since there were no navigable rivers in this hill region.
Since Saulsbury, was some 30 airline miles away it was easy to
see that a railroad to Ripley would improve trade conditions in the
town. At least some of
Falkner’s incentive came from the fact that the state of Mississippi
had a law in effect at this time which promised to pay a subsidy of
$4,000 per mile for all standard gauge railroads built in the state.
project was no more than an idea for about two years, but Falkner
proceeded to clear away legal and financial obstacles as rapidly as he
could. Since there did not
seem to be sufficient demand for a standard-gauge railroad which would
run from Ripley to the Memphis and Charleston, the Colonel decided to
try to build a narrow-gauge line but, under the existing statute, the
state could not subsidize a narrow-gauge road.
At this point the legal training of Falkner came to the fore, and
he managed to persuade the Mississippi legislature to change the law so
that narrow-gauge lines could receive state aid.
this encouragement, a charter was secured from the Mississippi
legislature by special act on May 12, 1871, to form the Ripley Railroad
Company, with Falkner as its president.
Preliminary maneuvers had taken valuable time, and at this point
time was very important. The
subsidy law had been changed to assist Falkner’s project, but it still
was to expire on August 31, 1872, and there was little likelihood of
having the proposition extended. Construction was pushed as rapidly, as funds would permit but
apparently, the $4,000 per-mile subsidy was not enough to complete the
road. The Memphis and
Charleston was appealed to, and the older road agreed to advance rails
and rolling stock to help get the branch in operation.
With this final grant of assistance it was possible to complete
the 24 miles of road from Ripley to Middleton, Tennessee, and open it
for service on August 30, just one day before the subsidy law expired.
According to one story, the commission which had to pass upon the
road’s completion made the journey on the first train over the line
and thus was in a position to see to it that Colonel Falkner received
his state aid payments.
this 24-mile strip of line was finished, changes were going on in
Colonel Falkner’s plans. On
March 16, 1872, the name of the Ripley Railroad Company was changed to
the Ship Island, Ripley and Kentucky Railroad Company.
Apparently, at this early date the dream had grown larger and the
Colonel and his partners were interested in tying their line into a much
bigger scheme. In the years
before the Civil War the Congress had voted federal lands to a company
known as the Gulf and Ship Island Railroad.
The road was planned to run from Ship Island, Mississippi, or
actually the mainland opposite the island, to or near Jackson,
Tennessee, through the east central section of Mississippi.
Although the road was not built at that time and its charter
lapsed, much interest was shown in 1872 in efforts to revive the old
company and to complete the project.
This was the movement with which Falkner was attempting to ally
his line when he changed its name to the Ship Island, Ripley and
the G&SI project was not reactivated immediately, Falkner continued
to work for the success of the larger scheme after his own small line
from Ripley to Middleton was completed.
Falkner was not alone in this, for the G&SI scheme attracted
many prominent Mississippians, including a large group of politically
powerful men. As a result
of their activity, the G&SI was finally rechartered in 1882, and on
March 13, 1884, this “new” company was subrogated to all of the
rights and privileges previously granted by the state of Mississippi to
the original company. This
presumably included the grants of federal land which had been made prior
to the war.
of this inclusion, the G&SI project of 1882 became a very explosive
issue. In the years since
the failure of the original company, most of the land formerly granted
to the railroad had been pre-empted or homesteaded in keeping with the
later federal laws on public land use.
If the G&SI should now prove to have legal title to this
land, the company would fall heir to much improvement in these holdings
and would also dispossess hundreds, if not thousands, of small
however, some, if not all, of the backers of the new Gulf and Ship
Island were aware of this situation and hoped to profit handsomely from
for the small landowners, at least one Mississippi political figure was
not committed to the G&SI project.
Senator E. C. Walthall arranged to protect the interests of those
who had pre-empted the land in good faith and who had complied with the
provisions of the homestead laws. A
bill before the Congress in 1886 proposed to forfeit all railroad land
grants except that land granted to the G&SI in the state of
Mississippi, which was to be taken up by the road on completion of the
project. Walthall amended
the bill to confirm the title of all settlers on the original G&SI
lands who had complied with the pre-emption and homestead laws.
The action prevented the wholesale dispossession of these small
landowners, although it did not deny the unclaimed land to the G&SI.
plans of some of the backers of the G&SI may have been temporarily,
halted, but the project was not dropped.
Other ways were found to gain public assistance in the scheme.
In the years after the war the state of Mississippi leased its
convicts as work gangs for agricultural and construction purposes.
With the political power which was behind the G&SI it was
comparatively easy to see to it that convict labor was available for
constructing the railroad. For
use of this labor the company vas to pay the state $50 per man per year,
and the road agreed to feed, house, and clothe the convicts.
The company was obligated to return the men dead or alive, which
necessitated the hiring of guards by the railroad.
In many instances it was easier to take back a dead convict than
it was to explain how one was allowed to escape.
This fact, coupled with the necessity of forcing the men to work,
created conditions of appalling brutality wherever these convict camps
were set up.
EXCERPTS FROM J. H. JONES’S PENITENTIARY REFORM IN
It is humiliating to record that the cruel abuses
practised under this system culminated between 1882 and 1887, when the
death rate rose to more than 15 per cent among the convicts employed
outside the walls, on plantations and other works.
[In 1886 all of the convicts of the state were leased to
the Gulf and Ship Island which had held them previously under an
This lease was made partly because it was thought the
convicts would be better treated, partly to encourage an enterprise
which had taken strong hold upon the people of the state and which it
was urged, would give to Mississippi a seaport of her own, and partly
This leasing system was common to all the Southern States
except Kentucky and probably Virginia.
It is difficult to understand how a system so barbarous could
have been tolerated in any Christian community.
It was evidently the product of human rapacity grafted upon the
conditions that a defunct slavery had left behind it.
It could only have flourished in an ex-slave state where
ex-slaves made up the great majority of its convicts.
Let us rejoice that it is no more.
work was begun on the line of the G&SI, it was decided to start at
the two ends and work toward a junction point near the middle of the
state. This plan caused the
construction of about 38 miles of additional narrow-gauge line from
Ripley down to Pontotoc, Mississippi, during the years 1886-87.
Some mileage also was completed near the Gulf coast, but the two
units were still separated by many miles of undeveloped right of way.
The northern part of the road owned by the G&SI was operated
in conjunction with Colonel Falkner’s line.
This gave a 62-mile road from Pontotoc to Middleton, Tennessee,
which connected with the Memphis and Charleston at Middleton and crossed
the line of the new Kansas City, Memphis and Birmingham Railroad (now
the St. Louis-San Francisco) at New Albany, Mississippi.
the G&SI was so completely dominated by men prominent in political
life, the road could be expected to have a checkered career.
No one was able to foretell its end because of the very unusual
circumstances surrounding the second collapse of the road which took
place in 1889. Wirt Adams,
postmaster at Jackson and one of the most ardent backers of the G&SI,
was killed in a duel on the streets of Jackson on May 1, 1888, as a
result of a political argument. This
scandal, coupled with other troubles the road had been having, was too
much, and the company went into the hands of receivers soon after. At a foreclosure sale on August l, 1889, Colonel Falkner
bought the 38 miles of line from Pontotoc to Ripley to add to his older
company, the Ship Island, Ripley and Kentucky, had also been in
difficulties, and it, too, had been sold by the courts.
Falkner purchased this line also, at foreclosure sale on July 23
both properties now under his own personal control, Falkner was ready to
reorganize his holdings and to set up one consolidated company to
operate the entire 62 miles of line.
Fate, in the guise of another pistol bullet, intervened, however,
and it was left to the Colonel’s son, J. W. T. Falkner, to complete
in 1878 the Ship Island, Ripley and Kentucky had become so financially
involved that a New York trustee was appointed to handle the property
for the benefit of the stockholders.
In a few months a new trustee, R. J. Thurmond of Ripley was
appointed, and he remained in that position until 1887, when he was
succeeded by C. L. Harris. Apparently
Thurmond had been trying to outmaneuver Falkner and acquire the road for
his own interest. When
Falkner prevented this by borrowing funds from a Memphis commission
house, Thurmond swore to “get even” with Falkner.
In the summer of 1889 Falkner ran for the legislature of
Mississippi with the intention of introducing legislation to rejuvenate
the Gulf and Ship island project and at the same time to assist his
Ripley Road. Thurmond ran
against Falkner in a bitter, vindictive campaign. Falkner won. On
election day, November 6, 1889, soon after the returns were in, Thurmond
shot and killed Falkner as he walked along one of the streets of Ripley.
Colonel’s death definitely finished the Gulf and Ship Island.
That line never regained its strength to continue its north-bound
development. Later it was
reorganized and built into Hattiesburg, Mississippi, then on toward the
northwest. Its line stopped
at Jackson, Mississippi, and in the decade after World War I the
Illinois Central acquired control of the company.
Falkner properties were finally combined into the Gulf and Chicago
Railroad Company on February 20, 1890.
This company operated the narrow-gauge line with little change
until July 1, 1903, when the Mobile, Jackson and Kansas City Railroad
Company purchased control from the Falkner family.
62-mile stretch of line had been built at a time when the financial
affairs of Mississippi and the South were at their lowest point. Neither the dispossession of homesteaders nor the use of
convict labor on the basis that existed in those dark days can be
condoned, but it is easy to see how some men could turn even to those
means in an attempt to help regain a measure of financial stability.
Other men saw the evils in the convict leasing system, and the
plan was outlawed by Mississippi’s Constitutional Convention of 1890.
J. H. Jones, who was a member of the Mississippi legislature from
1886 to 1890 and lieutenant governor from 1896 to 1900, was one of the
major enemies of this system. Figure 22 presents some of Jones’s comments on the leasing
line was not well located from the standpoint of railroad operation.
The right of way had been chosen in an attempt to keep as many
farmer shippers happy as possible and in an effort to keep expenses at a
minimum. The Colonel once
boasted that it was the cheapest railroad ever built, and later users
have been inclined to agree with him.
Instead of running as straight as possible, the road tried to
stay on top of the ridges of the region in an effort to avoid the
problems and expenses of bridging streams or bottom lands.
In the light of later experience, it appears remarkable that this
line was built at all, and there is little doubt that the prime factor
was the driving ambition of William C. Falkner, lawyer, politician,
novelist, and railroad builder, an entrepreneur who refused to accept
defeat and who kept pushing his plans forward to the very end.
FORMATION OF THE MOBILE, JACKSON AND KANSAS CITY
approximately, the same time that Falkner began to interest his
neighbors in railroad construction, a similar program was being
undertaken at Mobile, Alabama. By
this date, Mobile had rail service in several directions, but there was
no direct line into the vast pine forests of Mississippi which lay
generally northwest of Mobile. Many
people were predicting that fortunes would be made from this timber when
it could be gotten to the lumber markets in the North and East.
this timber should be moved to Eastern markets through the port of
Mobile, an extensive and profitable trade could be developed. For these reasons Mobile businessmen supported the
development and a company known as the Mobile and Northwestern Railroad
Company was chartered under the laws of Alabama on February 20, 1870,
and in Mississippi on July 20, 1870.
The proposed road was to run from Mobile to Hattiesburg,
Mississippi, thence to Jackson, and on northwestward to a point on the
Mississippi River opposite Helena, Arkansas.
for this entire line were run, and construction was begun, at both ends
of the project. More work
was done at the Helena end of the line than in the Mobile area but no
commercial service was ever offered by the Mobile and Northwestern.
The dream remained, but the drive to accomplish was lacking, so
the project lay dormant for almost 16 years.
The 24 miles of graded roadbed from Mobile to Wilmer, Alabama was
allowed to go unused, of course suffering deterioration, but was not
entirely lost. By 1887 the
demand for Southern pine timber was so strong that the project was
revived under control of a new company called the Mobile, Hattiesburg
and Jackson Railroad Company.
This line was also chartered by both Alabama and Mississippi as
separate companies which were later consolidated into one company known
as the Mobile, Jackson and Kansas City Railroad Company.
This merged company which came into existence on February 20,
1890, was unable to renew the work for a number of years, but it did run
additional surveys. By
December, 1896, the company was finally able to get construction started
on the first 50-mile sector of the line. The driving force behind this new start to build the
railroad was Frank B. Merrill
of Mobile, who, like Falkner of Ripley, also carried the title of
Merrill’s company used about 17 miles of the former roadbed, but a new
entry into Mobile was selected. Land
was bought at Choctaw Point, about 2 miles from the older harbor area of
Mobile, to be developed as a port facility for the new road. After much delay in construction, the line was opened in 1898
from Mobile to Merrill, Mississippi, a town in name only, some 50 miles
from Mobile on the banks of the Pascagoula River.
The road operated this 50 miles of line for about four years
before more construction was undertaken.
and operation of 50 miles of railroad does not seem to be a great
accomplishment today. Before
the turn of the century, however, this was a larger undertaking,
particularly when one considers the condition of the territory to be
served. President Merrill
had the following to say in the company’s annual report for 1900:
it is borne in mind that the road has only been in operation two years,
and when opened for traffic there was not a village or hamlet on the
line, I think you are to be congratulated upon our steady and
June 1, 1902, the road had built 19 more miles of line to Beaumont and
was rapidly building on toward Hattiesburg.
This 26-mile segment of the road was opened for service on
November 17, 1902, which gave the road a 96-mile main line from Mobile
to Hattiesburg in the heart of the pine region of Mississippi.
most significant change took place in the policy of the road sometime in
the year of 1902. Instead
of building on from Hattiesburg to Jackson, Mississippi, and then
further to the northwest, the road decided to turn its line northward
from Beaumont. The
management of the company decided that too many roads had already been
constructed in the area northwest of Hattiesburg.
There still remained, however, much unopened timber land between
Beaumont and Laurel and further north.
Hence, the line was to change its course and aim for Chicago
instead of Kansas City. Perhaps
one reason for this change in plans was the fact that the road got a new
top executive in the person of W. D.
Stratton, a New York financier.
Stratton, who had been on the board previously, became chairman
of the board of directors and president in 1903.
the Mobile, Jackson and Kansas City decided to build its lines northward
from Beaumont, casual surveys indicated that this new project would
logically be expected to traverse the same territory which was occupied
by Falkner’s Gulf and Chicago from Pontotoc to Middleton.
Another company, the Kingston and Central Mississippi Railway
Company was operating about 24 miles of line which ran from Kingston,
just north of Laurel, to Bay Springs, Mississippi.
Rather than parallel these lines, the Mobile, Jackson and Kansas
City decided to buy the property of these companies and incorporate
their mileage into the larger road.
keeping with the expanded plans of the company, construction was pushed
northward, and the 42-mile stretch from Beaumont to Laurel was opened
for use on December 20, 1903. Also,
on June 26, 1904, the 51-mile segment from Laurel to Newton was placed
in service. In this sector
the 24 miles of the Kingston and Central Mississippi had been
reconstructed and standardized; the remaining mileage was new
this work was being done in the southern segment of the line, the Gulf
and Chicago also was busy. This
company had been bought from the Falkner family, and a new corporation,
Gulf and Chicago Railway Company, had been established.
The new company immediately began plans to change the Gulf and
Chicago from its narrow gauge to standard gauge and also to build
southward toward the Mobile, Jackson and Kansas City.
June 20, 1904, the 18-mile sector between New Albany and Pontotoc was
reopened with standard gauge. Construction
below Pontotoc was in progress, with the work being split up into units
of varying length depending on local conditions.
The annual report of the Mobile, Jackson and Kansas City for June
30, 1904, stated that 85 per cent of all grading between Pontotoc and
Decatur was complete, and track laying was in progress in both
directions out of Ackerman, Mississippi.
This point was on the rail line from Durant to Aberdeen,
Mississippi, and thus was being used as a central construction camp
because rail and other supplies could be shipped in to this site.
last 9 miles of construction on the southern part of the project was
opened for commercial service on June 19, 1905.
This was the mileage between Newton and Decatur, Mississippi.
The remaining portion of the narrow-gauge lines of the Gulf and
Chicago was changed to standard gauge and reopened for service on June
27, 1905. This was the
northernmost segment between New Albany and Middleton.
136 miles of new construction which the Gulf and Chicago was supervising
was tied together on September 5, 1905, in the middle of the bridge over
the Pearl River, some 200 miles from Mobile.
Although it was connected on September 5, the entire line was not
open for commercial transportation purposes until April 16, 1906, which
may be considered the date the road was actually completed. This is a broad statement, however, for relocations and
realignments were being carried out intermittently from 1906 to 1925.
of the most expensive of these relocation projects was carried out in
1910-11 in the town of Pontotoc, the southern terminal of Falkner’s
old line. The charter for
the Gulf and Chicago Railway Company provided that the road should be
run southward from the old narrow-gauge line through the center of the
town. In an effort to reduce construction costs, the company later
decided to build to the west of Pontotoc with a spur into the business
section of the town. The
citizens protested this action, however, and finally took the issue to
the Mississippi courts and later to the Supreme Court of the United
States. The Supreme Court in 1906 decided in favor of the people of
Pontotoc and ordered the road to relocate its line. Efforts to compromise the case failed, and eventually a new
sector of line about 1
1/2 miles long had to be
built at a cost of $75,000. One
interesting outcome of this case was the fact that R. V. Fletcher,
attorney for Pontotoc, made quite a name for himself by winning the suit
and as a result was appointed assistant attorney general of the state of
necessitated his moving to Jackson, where his rise was rapid.
In 1907 he became attorney general and then was elected to the
Mississippi supreme court in 1908. At this point the railroads decided he was too good a man to
have against them. In 1909
he entered private practice, mainly devoted to railroad affairs, along
with J. N. Flowers and G. U. Whitfield of Jackson.
One of his early assignments was to help buy right of way through
Pontotoc for the relocation of the line.
In 1911 Judge Fletcher moved to Chicago to join the full-time
legal staff of the IC. He
became vice-president and general counsel of the IC in the early
1930’s and has climaxed his brilliant career as general counsel, vice
president and president of the Association of American Railroads.
At this time he is still active in certain cases for the
association but is close to the point of retiring, since he will reach
the age of eighty three this year.
the years in which construction of the main line was being pushed, the
company also was developing its pier facilities at Choctaw Point.
In 1904 the annual report of the company commented on the large
amount of timber which was being shipped from the company’s clocks.
A 23-foot channel had been dredged to this property which allowed
entrance of the heaviest vessels that could use the upper portion of
Mobile Bay. Also, while the main line was being completed, a 7-mile
branch was built into the town of Ellisville from the main line south of
the road was listed as completed in the annual report for June 30, 1906,
the company, was not in a prosperous condition.
During 1905 the whole line showed only $19,000 net income, and
the completed road in 1906 showed only $29,000.
Part of the cause of the poor showing was a yellow-fever epidemic
in New Orleans in the summer of 1905.
This resulted in quarantines in both Mississippi and Alabama
which lasted from July 29 to October 23 and seriously interfered with
rail operations. Also the
Pontotoc station was closed by court injunction from March 11 to April
13, 1906, which further decreased profits.
problems of construction difficulties and low profits were too much for
the Mobile, Jackson and Kansas City.
On December 26, 1906, the road was placed in receivership and was
operated thus until November 30, 1909, when its successor company
receivers found that the company’s financial affairs were worse than
reported, and events along the line were not conducive to recovery.
In 1907 there was a severe depression in the overexpanded
lumbering industry along with the national decline in business during
the year. The receivers
reported that of approximately 197 sawmills located along the lines of
the road only 17 units were in operation in the first 6 months of 1907
and these were on “short” time.
During the years 1907-08 the Hattiesburg branch had to be
practically rebuilt, and heavy maintenance work was needed all along the
line. Embankments had to be
widened to 18 feet, cuts to 24 feet, and 128 miles of the road had to be
trouble developed in the gumbo lands between Bay Springs and Roberts and
also between Houston and New Houlka. The track in these areas almost disappeared and necessitated
very heavy ballasting and reconstruction in some places. With these conditions facing the operation, it is not
surprising that for 1901 there was a deficit of $416,000 and for 1908,
often seems to come in cycles, and apparently the Mobile, Jackson and
Kansas City was having a few of its lean years at this time. The annual report for 1909 stated, “Much damage was
inflicted and traffic was demoralized all over the system for several
days in May and June by rains and floods, so seriously affecting the
property that operations were entirely suspended for 13 days.
Five miles of track were under water for the period named, though
this track had been raised 2 feet above the highest recorded water mark;
and since the recent flood these banks have been raised another 3 feet. In spite of this trouble the receivers reduced the deficit to
$52,000 for the year 1909.
after the receivership had been set up in 1906, a program for
reorganization was begun. A
plan was prepared as of December 11, 1907 which was later modified and
subsequently was used to establish the New Orleans, Mobile and Chicago
Railroad Company. The final
plan called for the consolidation of both the Mobile, Jackson and Kansas
City and the Gulf and Chicago into one company.
One of the most interesting features of the plan was a provision
to merge a third company into the consolidated new firm.
This third company was chartered for the purpose of building a
rail line from a point near Ovett in Jones County to a location on the
Louisville and Nashville very near to New Orleans.
This line, in conjunction with the Louisville and Nashville,
would give the Mobile, Jackson and Kansas City or its successors an
entrance into the South’s major port.
The line was never built, but the idea of of gaining an entry
into New Orleans remained a live issue.
NEW ORLEANS, MOBILE AND CHICAGO RAILROAD COMPANY
Mobile, Jackson and Kansas City and the Gulf and Chicago had a total of
$16,196,000 in stock and long-term debt outstanding when they went into
receivership in 1906. Of
this total, $8,074,000 represented the stock of both companies, and
$8,122,000 was in funded long-term debt.
Since the two roads had about 402 miles of main lines, this meant
that the combined roads had a stock capitalization of $20,000 per mile
and a long-term debt capitalization of the same amount.
These figures together give a total per mile capitalization of
$40,000, which is a high figure for a railroad of the quality of these
reorganized company was to bear an even higher capitalization which
contributed heavily to its undoing.
The New Orleans, Mobile and Chicago began its operations with a
total capital structure of $20,222,000, composed of $9,333,000 in stock
and $10,889,000 in bonds. For
the same 402 miles of line the capitalization was $23,000 per mile in
stock and $27,000 in bonds, with a total of $50,000 per mile.
The $27,000 per mile in bonds at 5 per cent meant that the line
had to earn $1,350 per mile net to pay fixed charges.
This the line proved unable to do in its four years of existence,
because of the poor condition of the roadbed and equipment and the lack
of economic development in the territory.
August 23, 1909, the properties of the Mobile, Jackson and Kansas City
and the Gulf and Chicago were sold at foreclosure to John A. Laing, who
acted for the reorganization committee.
The new company began to operate the property as a unit on
December 1, 1909, not quite three years after the older roads had passed
into the hands of receivers. J.
C. Rich of Mobile, long-time attorney for the line, temporarily acted as
president but was succeeded by L. S. Berg with W. F. Owen as
New Orleans, Mobile and Chicago began its operations in a confident
manner. The company planned
to extend its tracks some 1.2 miles from Frascati (Choctaw Point) to the
center of Mobile. New
freight and passenger terminals were to be built at the corner of
Augusta and Royal Streets. The
Board of Directors also decided to rebuild Pier No.
3 at Choctaw Point to improve the facilities for handling export
February 1, 1910, the company began to use the terminal facilities of
the New Orleans and Northeastern at Hattiesburg.
This change was expensive but was made because the facilities of
the New Orleans, Mobile and Chicago were “entirely inadequate and
expensive to operate.”
company was still plagued by faults or errors in previous construction.
During 1911 a new concrete and steel drawbridge had to be built
over the Pascagoula River by order of the federal government.
A fixed steel bridge had to be replaced in order to keep the
river navigable. At the same time a new bridge of heavier steel had to be
built over Dog River near Mobile. The
relocated line into Pontotoc was finally completed in 1911 as well as a
relocation of the road into Decatur.
New Orleans, Mobile and Chicago in 1911 was a “log” line without a
strong northern terminal and with a too heavy bonded debt, according to
President Berg. A report
from the president to the Board of Directors at their meeting on March
6, 1911, said in part:
“During the past month I carefully .
. . canvassed . . . the affairs of this company and am constrained to arrive at
the conclusion that we have now reached the maximum earning capacity of
the property, with operating expenses at a minimum. . . .
In event a depression in the lumber business of the country
should ensue our resources will be severely taxed to meet fixed charges
and maintain the property. Lumber
represents 71 per cent of our total tonnage and approximately 40 per
cent of our entire revenue. . . . Permanent relief can be obtained from the conditions above
outlined by an extension of the line to Jackson, Tennessee. .
. . In my opinion therefore it is absolutely essential to the
future welfare of the property that arrangements be immediately made to
extend the line. . . . This extension will also give us a direct line to Chicago in
conjunction with the Illinois Central and will give us a connection with
the Nashville, Chattanooga and St. Louis which we do not now have.”
keeping with his idea of extension of the line, Berg held a meeting in
Jackson, Tennessee, on Friday, March 24, to discuss this idea with
Jackson leaders. He
reported that the people seemed to be enthusiastic and apparently were
willing to vote a $100,000 subscription in stock of the company at par
if the line was extended. On April 3 the president reported to the board that the
line could not haul refrigerator cars north of Laurel because of track
conditions and lack of northern connections.
He also stated that much northbound business which originated on
their line had to be moved south to Mobile and turned over to
connections there instead of moving north over the New Orleans, Mobile
the year ending June 30, 1911, the New Orleans, Mobile and Chicago had a
net income of $84,000, but this favorable condition did not last.
This was the last year the New Orleans, Mobile and Chicago would
ever make a profit. The
property would not produce any more net income until the reorganization
plan had been put into effect by the creation of the GM&N in 1917.
of the major causes of the downfall of the New Orleans, Mobile and
Chicago was a trackage agreement which became effective on March 1,
1912. On that date the road
began operating its own trains into New Orleans from Laurel over the
tracks of the New Orleans and Northeastern.
For the 4 months from March 1 to June 30, 1912, this agreement
cost the road about $40,000 and for the 12-month period from July 1,
1912, to June 30, 1913, the agreement cost $168,500, even though the
contract was abrogated on June 1, 1913.
This disastrous arrangement was begun at the behest of the Frisco
and the Louisville and Nashville railroads which had assumed control of
the New Orleans, Mobile and Chicago in the last months of 1911.
These two roads in partnership owned about 56 per cent of the
stock, and their representatives took charge at the first directors’
meeting of 1912, which was held on January 11.
On January 13 L. S. Berg resigned
as president, and W. F.
Owen succeeded him in the top management post.
1912 the New Orleans, Mobile and Chicago also began extensive track
improvements on the line between Laurel and New Albany.
This segment of the line was to be placed in good condition as
soon as possible by extensive ballasting, putting in new creosoted ties,
and installing continuous rail joints to replace the old tie plates.
The purpose of this improvement was to turn the central sector of
the New Orleans, Mobile and Chicago into a “bridge” to enable the
Frisco and eventually the L&N to enter New Orleans over this route.
Frisco traffic would move to New Albany, then down to Laurel over
the “captive” New Orleans, Mobile and Chicago, and from there on to
New Orleans. The L&N
was to be served in much the same manner, as soon as a connecting line
could be built from Middleton to the L&N tracks near Milan or
the directors of the New Orleans, Mobile and Chicago found that their
road was facing a large deficit for the fiscal year 1913, the New
Orleans traffic arrangement was cancelled on June 1, 1913.
The total deficit for the company as of June 30 turned out to be
$299,000, which was only partly explained by the statement that heavy
losses due to washouts caused by incessant rain had forced the detouring
of trains from February 14 to March 14.
disasters of the years 1912 and 1913 caused the collapse of the New
Orleans, Mobile and Chicago. On
June 2, 1913, Kuhn, Loeb and Company advised the company, that it was
going to have to sell part or all of $952,000 first and refunding bonds
to satisfy an unpaid note for $633,000 which was long past due.
By September the directors admitted that the company was
insolvent. A bondholders’
protective committee had already been formed and a reorganization was
being planned with J. W. Platten, a representative of Kuhn, Loch and
Company, in charge. On
December 19, 1913, the road once more went into the hands of the courts,
and F. W.
Owen, former president, was named receiver to operate the
the company was bankrupt and the directors knew it, this fact did not
diminish the desire of the management to build a line into New Orleans.
At a board meeting on December 8, 1913, plans to keep the
property in operation during a receivership were discussed.
At the same meeting a lengthy discussion centered around a
proposal to extend the line from Beaumont to a point on the L&N
tracks near the Pearl River just across Lake Pontchartrain from New
Orleans. The proposed line
would serve the Edward Mines Lumber Company which then owned the last
major block of uncut timber in South Mississippi.
Again the dream failed to materialize, but the idea took root
more firmly in the minds of the men who controlled the road.
Fourteen more years were to pass before this dream was
accomplished by the GM&N in 1927 through its traffic agreement with
the New Orleans Great Northern.
bondholders’ protective committee which had been formed in the early
summer of 1913 employed the firm of W. H. Coverdale and Company of New
York to study the road and to report its findings to the committee.”
This report was submitted on September 2, more than three months before
the road went into receivership. It
was a very complete report and proved not at all complimentary to the
of the most exhaustive sections of the report discussed the construction
problems of each of the major segments of the road. The northern sector
from Middleton to Pontotoc was described as changed from narrow to
standard gauge but with little else done to improve the roadbed. The section above New Albany was singled out as being in poor
condition. The banks were
narrow, cuts were unditched, the track unballasted and unsurfaced. Ties were in bad condition, and the rail was not close to
meeting operating standards. Some
32 miles of the rail in this section were leased from the Southern
Railway and had been worn out when obtained, (In 1913 the company was
replacing this leased rail as rapidly as conditions would permit.)
road from Pontotoc down to Newton was the section which had been
constructed under contract with the Gulf and Chicago.
Coverdale said this contract work was badly built and in part
poorly located. The report
The physical condition of this
section of the whole line in 1906 was competently reported as deplorable
and in 1908 was shown by the Mississippi Railroad Commission to have
been in bad condition due in part to entire lack of maintenance from
date of construction to that time. Roadbeds on fills did not exceed 14 feet in width cuts were
unditched and partly filled up. Grade lines were below high water, timber bridges were of
poor design and poor material, cheap pine ties, no ballast, rail 60 lb.
to 70 lb. and badly damaged under above conditions.
of this section had been rebuilt since 1908, but much work still
remained to be done to overcome defective construction.
sector from Newton to Merrill was described as built in 1903-04 by
“Gulf City Construction Company with results even worse than those
noted above (Pontotoc-Newton) because on about 1/2 of the section
(Newton to Bay Springs and Laurel to Beaumont) much of the road bed
consists of unstable material known as soapstone or `gumbo’ which has
greatly increased the cost of maintenance and at times has caused the
suspension of traffic.” This section also had been rebuilt since 1908 and was in
relatively good condition in 1913.
road from Merrill to Mobile was pronounced adequate and in fair
condition since traffic on this sector was light.
The branches to Hattiesburg and Ellisville were described as
poor, but traffic on both was considered negligible and no changes were
needed. The general
condition of the line in 1908 was reported to have been very poor.
The new management in 1909 attempted to correct the situation but
had not been able to do all that was needed.
The Mobile freight terminal was largely undeveloped, and the
Mobile passenger facilities were classed as negligible. One of the bright spots of the entire picture was the
equipment situation. About
one third of the locomotives and nearly half the cars were less than six
of the harshest part of the report had to do with financial affairs of
the construction era. In
one instance a contract called for 32 miles of the old Gulf and Chicago
to be made standard gauge at a cost of $10,000 per mile.
Specifications were attached to the contract to show what the job
included. Bonds in the
amount of $321,700 were paid out for this contract on the strength of a
certificate of April 18, 1907, that the work had been done.
Later examination showed that only $51,870 was spent by the
contractor on this work which was not done according to specification.
The contract called for new 70-pound rail at $30 per ton to be
bought and installed. No
rail was bought; instead, 50-pound rail was leased from the Southern.
was guilty of an understatement when he said that most of this money
went for “purposes not contemplated by deed of trust.” He closed his
statement about financial affairs with a ringing indictment of the
reorganization of 1909. He
Upon such operating record was based the reorganization
plan of November 30, 1909 which was unsound not only in that it
perpetuated a mortgage debt in excess of the value of the property, but
in that it greatly increased such debt by funding unearned back
interest, floating debt, and miscellaneous claims, in full. It was unsound also not only in that it disregarded the bad
physical condition of the property, but in that it contributed
substantially nothing towards its upbuilding; and finally it was unsound
not only in that it disregarded the company’s poor record of past
earnings, but in that it necessitated greatly increased earnings in
order to prevent the default which has since occurred.
such a bad general picture, one might assume that Coverdale might be
pessimistic about the future of the road.
This was not the case, however, for his recommendations were to
expand the line instead of abandon it.
The road was justified in operating in its present condition
between Mobile and Middleton and in a normal setting the line should
make money on a reasonable capital structure.
Coverdale suggested a drastic debt reduction in keeping with the
quality of the road. His
most spectacular recommendations however called for the company to build
two new parts to the main line. A
northern extension should be built to Atwood, Tennessee, to connect at
that point with the L&N. Also,
a southern extension should run from Beaumont to Ansley, 35 miles east
of New Orleans. It, too, was on the L&N.
Both of these extensions were estimated as being able to earn
more than their own charges under a strengthened company.
Coverdale report had a great impact on the reorganization committee,
even though some of his recommendations were not followed. Part of the explanation for that lies in the fact that it was
not until March, 1915, that a reorganization plan was perfected.
By that time money markets had been disrupted because of the
outbreak of World War I, and Coverdale’s idea of issuing bonds to pay
for new construction was not possible for the bankrupt New Orleans,
Mobile and Chicago.
reorganization committee which had set up the New Orleans, Mobile and
Chicago obviously was quite unrealistic in its handling of securities.
No such charge could ever be levelled at the committee which
liquidated the New Orleans, Mobile and Chicago and organized the
GM&N. The committee of
1913-15 decided it wanted good securities or none at all. Its plan called for all bonds of the old company to be
exchanged for preferred and common stock in the new company, which would
have no bonded indebtedness except $27,000 of an old Mobile, Jackson and
Kansas City issue which had not been paid off.
Holders of each $1,000 bond of the old company were to get
$833.33 in preferred stock and $750 in common stock of the new firm.
Holders of unsecured debts and deficiency judgments were to be
given common stock in par value to equal their total claims plus
interest at 6 per cent up to December 31, 1914.
Holders of old preferred and common stock were given a chance to
buy new stock if they so desired at a low price, but few seemed
interested in availing themselves of this provision.
stock in the new company was to be placed under a trust agreement which
would allow continued operation of the new company for five years
without stockholders’ meetings. At
the end of that time the stock was to be released and the trust
primary, purpose of the trust was to assist the road in one extension
program instead of the two which Coverdale had recommended. The committee had decided to extend the line to Jackson,
Tennessee, instead of to Atwood. Jackson
was a closer point and the committee also was impressed with the fact
that at Jackson several roads with lines running to the north could be
reached, instead of the one at Atwood.
if any railroad reorganizations have been as drastic as the one proposed
by the reorganization committee of the New Orleans, Mobile and Chicago
in March, 1915. One cannot
give too much credit for the later success of the GM&N to this
action, which almost entirely freed the line from fixed charges.
There is little doubt but that the strength necessary to do this
task came primarily from the agents of Kuhn, Loeb and Company, which had
been the road’s banker for many years.
Platten, chairman of the reorganization committee, and R.
F. Brown, who served
as secretary, were associated with the New York banking house.
all of the security holders agreed with the reorganization committee
that all bonds should be wiped out in order to allow the road to grow.
Suits were filed against the plan, and it was not until January
1, 1917 that the GM&N became an operating concern.
W. F. Owen, who had served as receiver for over three years, was
elected President of the new Company when it began operations.
GULF, MOBILE AND NORTHERN - 1917-19
first order of business for the new Company after it assumed control on
January 1 was to get started on the program to extend its line to
Jackson, Tennessee. This
40-mile extension was expected to add a haul of almost 83 miles to a
majority of the through haul business of the GM&N.
Because there was no northern terminal transfer point most
through freight business left the line at New Albany, some 43 miles
a meeting of the Board of Directors which was held on January 18, the
GM&N gladly accepted the tentative offer of the city of Jackson to
buy 1,000 shares of $100 par value common stock.
During this same meeting of the Directors, I. B. Tigrett was
elected to membership on the Board as a representative of the city of
Jackson. The Directors felt that the Company would get better local
co-operation if a member of the Board was from Jackson, and the Company
undoubtedly felt that its chance of getting the $100,000 “bonus”
from Jackson would be enhanced if a local man were associated with the
people of Jackson must have been interested in the GM&N or in
“Ike” Tigrett or in both, for on May 8, 1917, the citizens voted,
790 for to 69 against, to issue $100,000 in city bonds to buy stock in
the railroad. The city
stipulated that construction had to begin within 12 months and the whole
project had to be finished within 24 months.
GM&N was just as eager for speed as was the city of Jackson.
As a result, actual construction was begun on April 20, 1917,
about two weeks before the election was held.
The company had been aware of the almost universal support for
its project and hence felt safe in making au early, start on
construction. After the
election the work was rushed as rapidly as conditions would permit.
construction project was started by the GM&N in 1917.
A branch road was begun which was to run from a point near
McLain, Mississippi, into the so-called Blodgett timber tract.
There were large, untouched timber reserves in this area which
lay between the main lines of the GM&N and the Mobile and Ohio.
McLain was about 60 miles north of Mobile on the GM&N and the
Blodgett branch was planned to extend about 35 miles from that point
toward the northeast. The
branch was to be built in sections, in a manner acceptable to the
these construction projects were being pushed forward, the road was
trying to expand its lines in other ways.
In turn the Board of Directors chose a committee to consider ways
and means of buying the 32-mile Meridian and Memphis to gain access to
Meridian, Mississippi. At
the same time, another committee was selected to look into possible
terms of purchase of the Birmingham and Northwestern.
company could not expand its lines south of Mobile, but improvement of
the road’s terminal facilities at Mobile was authorized by the Board
of Directors in June, 1917. The
GM&N was trying to put its house in order as rapidly as its slim
resources would permit.
arrangements were made for the purchase of the Birmingham and
Northwestern during 1917, but a trade was agreed upon which would give
the GM&N control of the Meridian and Memphis .
The plan was completed in January, 1918, and since that date the
two roads have operated with a single policy, even though the GM&N
did not merge the Meridian and Memphis completely into its own
corporation until 1929.
year 1917 brought the United States into war with Germany, and the end
of 1917 saw the United States government take over control of most of
the nation’s railroads. The
GM&N was not a vital line in many respects but it, too, went under
the control of the Director General of Railroads, W. G. McAdoo.
Federal control became effective on December 31, 1917.
corporate officials of the GM&N had little control over the
Company’s affairs during the 26 months of federal control. All operating policy decisions were made by the federal
manager, who for most of the period was Colonel R. V. Taylor. Prior to federal control, Taylor had been vice-president and
general manager of the M&O. Taylor,
in turn, commissioned W. F.
Owen to become General Manager of the GM&N.
In order to accept the federal appointment, Owen had to resign as
President of the GM&N which action severed his relations with the
Company. J. W. Platten,
Chairman of the Board of Directors, accepted the temporary, assignment
of President so as to keep the corporate affairs of the Company in order
as much as possible.
General McAdoo was not in favor of keeping the so-called short lines
under government control. At
one time during the month of July, 1918, the GM&N was returned to
private control for a short period, but the order was soon revoked, and
the GM&N remained throughout the remainder of the period under
the government operators kept control of the GM&N, the Company was
not treated in the same manner as the more important through lines such
as the M&O and the IC. A
large majority of the through freight from or to Mobile was moved over
the M&O, and maintenance on the GM&N was not kept up to
standard. This policy was
only a natural result of the manner and personalities of the federal
control group. In spite of
its being natural, the GM&N management could not be happy under such
an arrangement. One of the
principal reasons that W. F.
Owen was not re-elected to the office of President of the
GM&N in 1920 was his acceptance of the policies laid down by his
superior officers, which in general proved distasteful and seemed unfair
to the Directors of the GM&N.
though there were differences between the aims of the corporate
management and the federal operators of the road, progress was made on
the construction program for the Jackson extension and the Blodgett
branch. The federal
managers provided certain funds to carry forward these projects.
On August 3, 1918, the first 18 miles of the Blodgett branch from
McLain to Avera was opened or use.
The Jackson extension project was more difficult and progress was
slower. In fact, the road
was unable to meet its deadline of completion by May, 1919, and had to
ask the citizens of Jackson for an extension.
On February 20, 1919, the citizens of Jackson main expressed
their faith in the GM&N and I.
B. Tigrett by, extending the time from May 12 to September 12,
1919. On September 2, ten
days before the new deadline, the road was opened for traffic and the
project accepted by the people of Jackson.
wartime spurt in shipbuilding hit Mobile just as it hit most other ports
of the United States. As a
result, a new firm, the Chickasaw Shipbuilding Company, was started at
Chickasaw, Alabama, just north of Mobile.
The GM&N in 1915 wanted to build, and did buy right of way
for, a 4-mile spur from its lines near Frascati to the Chickasaw
shipyards. This was one
project on which the Company did not get any support from the federal
managers. Since the M&O
and the Southern both entered Mobile from points quite close to
Chickasaw, the federal managers decided that the GM&N’s Chickasaw
spur, as it was called, would be a wasteful duplication of facilities.
Because of this decision, no federal funds or railroad operating
revenues could be applied to this project, and its completion was
prevented. Some six years
later, when the GM&N was in stronger financial condition, the spur
was built to allow both the CSI&N and the L&N to serve the new
Alabama State Docks without using the lines of the M&O or the
owners of the Birmingham and Northwestern apparently wanted too much for
their 49 miles of railroad, for on June 17, 1918, Mr. Tigrett requested
that the GM&N cease considering it for purchase at that time.
This did not prevent the friendly co-operation of the two lines,
because in the, latter part of 1919 the GM&N made plans to use the
terminal facilities of the Birmingham and Northwestern in Jackson rather
than build its own.
In May 1919, President Woodrow Wilson announced that he intended to
return the railroads of the country to their private owners at the end
of the year. As the months
passed it became apparent that the date of January 1, 1920, could not be
met because Congress had not passed the necessary legislation.
In order to be ready to maintain continuous operation, the
GM&N chose a new President on October 24, 1919.
I. B. Tigrett, of Jackson, the local Director who had been chosen
to see to it that the GM&N received its $100,000 “donation” for
completing the Jackson extension was chosen as “temporary”
President. At the same time
Mr. Tigrett’s friend and former assistant, Frank Hicks, was made
Comptroller of the Company. With
this experienced team in control of the financial affairs of the
GM&N the Board of Directors hoped that the Company would be able to
weather the storms which seemed to be ahead.
The fact that this history has been written indicates to some
extent at least the success which has attended their efforts in the
thirty-three years since that time.