The Gulf, Mobile and Ohio
By James H. Lemly





The Mobile and Ohio Railroad-1848-1940



Joining  the MJ&KC and G&CTHE HISTORY of the Mobile and Ohio Railroad Company’s 92 years of useful life cannot be compressed into a few pages in this short chapter.  The only thing which can be done is to bring to mind the most important events in the history of the road which have tended to make the M&O available for the merger with the Gulf, Mobile and Northern in 1940.  The full story of the unusual development and the importance of the M&O must be reserved for a separate study.

The Mobile Road, as it was often called in its early days, was planned by the people of Mobile to serve the city, in the same manner that the Mississippi River had served New Orleans.  The railroad was expected to bring the trade of the upper Mississippi, the Missouri, and the Ohio River basins to Mobile.  The project was named the Mobile and Ohio Railroad, because it was to connect that city with the great river systems which converged near Cairo, Illinois, and thus the port of Mobile was to assume a much greater role in commercial affairs at the expense of New Orleans.

Mobile had been hard hit by the panic of 1837, and even prior to that time her importance as a port had been declining.   Mr. J. D.  Baldwyn of Mobile conceived the plan of restoring Mobile to its former position of wealth and commerce by the development of a railroad which would divert much of the immense export trade of the northern states to his native city.  For a number of years his ideas and pleas fell on deaf ears.  By 1847, however, he had aroused enough enthusiasm for his project to secure public subscriptions to finance a successful reconnaissance trip from Mobile to the Ohio River.

After the preliminary survey in 1847 showed the road to be feasible, the Mobile Road finally became a popular project for Mobile.  Its citizens henceforth gave it substantial assistance.  The M&O was chartered in January and February, 1848, by the states of Tennessee, Alabama, Mississippi, and Kentucky in the order named.  Much interest was aroused in all the states through which the road was to run.  State, county, city, and individual assistance was sought, and large amounts of stock were subscribed.

The city of Mobile voted a special property tax to force all property owners to buy stock in the road.  The state of Alabama made substantial loans to the company.  Mississippi bought a large amount of stock in the project.  Tennessee granted a loan based on the number of miles of the road which ran through the state.  Most of the counties through which the road ran purchased stock and many of the “cities” along the route also granted aid.

The thing which really made the building of the road possible, however, was the grant of federal lands to aid in its construction.  Senator Stephen A.  Douglas of Illinois must get most of the credit for the passage of the land grant bill to aid the Illinois Central and the M&O, which was passed by Congress in September, 1850.  The congressmen of Alabama, Mississippi, Tennessee, and Kentucky heartily supported the measure after the M&O had been included in Douglas’ pet project.  The land thus granted to Mississippi and Alabama was to be transferred to a suitable company to build a road.  The estimated value of the land at the time was at least $2,000,000, which was thought to be enough to “iron” the road in the states of Mississippi and Alabama.  As the federal government had no public domain in Tennessee and Kentucky, no grants were made in those states.

After the grant was transferred to the M&O by the states of Mississippi and Alabama, the company was able to proceed with construction.  The first sector of the road to be ready for service was the 30-mile line from Mobile to Citronelle, Alabama, which was opened in 1852.  Although there were many problems and delays after this start, the line was finally completed from Mobile to Columbus, Kentucky, on April 22, 1861.  River steamers were used to connect Columbus and the M&O with other river ports and with the IC at Cairo.  The management of the M&O expected that much of the M&O’s traffic would come from St. Louis, and since this would necessitate a river crossing, the Columbus location would serve almost as well as Cairo.  This was especially true because the St.  Louis and Iron Mountain Railroad had planned to terminate its line at Belmont, Missouri, just across the river from Columbus, Kentucky.  At any rate, the management of the M&O felt justly proud of its accomplishments up to 1861, as this quotation from the annual report of 1866 shows:

At the commencement of the war, the company was in good condition, had inspired universal confidence at home and abroad and had ample resources to meet all its engagements.  The road in its progress to completion had set and overcome opposition of the greatest magnitude.  In the.  State of Mississippi, it had been opposed by the friends of a rival road from New Orleans; in Tennessee it had met the violent opposition of the enterprising and energetic city of Memphis.  The great length of the road, passing through sections of the country having no previous business or commercial connection with each other, gave to these rival interests an opportunity for playing on the passions and prejudices of the particular localities, and throwing obstacles in the way of its progress.  Towns and villages, a short distance from the track of the road, put themselves in hostility to it because it did not change its location and send its cars directly to their doors.  When the company was compelled to apply to the legislature of the several states through which the road was located for necessary legislation to aid its completion, we were constantly met by opposition from these local and rival interests.

But by energy and perseverance this great road was completed and on the 22nd of April, 1861, when the last rail was laid in the track, the company had a road of the first class, built in the most substantial manner with rails and fastenings and other materials unsurpassed in the United States and supplied with rolling stock amply sufficient to meet all the requirements of its extensive business.  From the resources then at our command, estimating the future earnings of the road at figures below what we bad a right to expect, it was safe to calculate that within two years from the completion of the road we could commence payment of dividends on our stock.

Because of the delay in construction, the M&O never had a chance to prove its real worth to Mobile.  The Civil War began almost immediately, and in a matter of months the northern terminal was in federal hands.  During the great struggle, the M&O served as a medium of transport and a target for both sides in the conflict.  Whenever one side or the other could not use the road for troop movement or supply, its soldiers were ordered to destroy the road to prevent enemy use.  The M&O emerged from the conflict in terrible condition.  The following quotation, also from the annual report of 1866, is a brief statement of the total damage which the war brought to the road:

The War came and the company has suffered largely by it.  The Confederate Government controlled the transportation of the road and we were occupied chiefly in transporting men and supplies for the array.  In this way, the Confederate Government became our debtors, including bonds, etc., in the sum of $4,983,871.23.  A part of this was due long before the close of the war, but we were not able to collect it because of alleged want of means of payment.  Add to this over fifty negroes costing $119,691.00 and Alabama State Bonds, since declared void, being issued for the purposes of the war $125,000.00 and it makes the round sum in Confederate currency of $5,228,562.23, all of which was lost to this company.  But our losses did not stop with a failure to get pay for services which we were by military orders, compelled to perform.  All our bridges, trestle work.  warehouses and station buildings between Union City, Tennessee and Okolona, in Mississippi, a distance of 184 miles, were destroyed.  General Sherman’s raid to Meridian destroyed north and south of that place all the warehouses, water stations, bridges and trestle work on 48 miles and on 21 miles of that distance, he bent, and as far as possible destroyed, the rails and fastenings.  From a full supply, of rolling stock of the finest quality, we were reduced to one-fourth of what was necessary and that was in bad condition.  Our repair shop at Jackson, Tennessee, was broken up; and on the evacuation of Mobile, the stationary engine and tools in the shop at Whistler were destroyed.  We had, at the close of the war, neither tools nor materials to repair our little remaining rolling stock and keep it on the track.  In this condition of things, the road was delivered back to us by the United States military authorities.

The M&O in 1865 needed to be almost entirely rebuilt and reequipped, while at the same time it was also necessary to provide for the past clue interest on the existing debt.  The creditors of the road were sympathetic and did not foreclose, but the road was unable to earn enough to restore a semblance of prosperity to the company.  Finally in 1875 the road passed into the hands of receivers, who operated the property for eight years.

In spite of its financial problems, the M&O did serve as an important transportation line for its territory.  The city of Aberdeen, Mississippi, built a branch from the main line of the M&O to Aberdeen, completing the project in 1870.  In the same general period the 14-mile Starkville branch was built and opened for service in 1875.

The M&O originally had been designed to extend to the Ohio River near Cairo, but under the pressure of construction problems and regional jealousies Columbus, Kentucky, was used as the northern terminal.  In the years before 1861 the managers of the M&O had hoped that the St. Louis and Iron Mountain Railroad from St.  Louis to Belmont, Missouri, on the Mississippi River opposite Columbus would be completed by 1861, but this did not take place until 1871.  By 1870 the M&O realized that the Belmont-Columbus transfer idea was not going to be an ideal arrangement; therefore, the company began preparations to extend the M&O from Columbus, Kentucky, to East Cairo, opposite the IC.  The plan was soon dropped, however, because of the financial difficulties of the M&O and not until 1880 was it revived.  Under the guidance of the receivers, the M&O went ahead with the project and on May 1, 1882, the extension to Cairo was put into service.

In 1886 the M&O acquired the narrow-gauge St. Louis and Cairo Railroad and changed it to standard gauge, thus making possible a through haul from Mobile to St.  Louis (except for the ferry service at Cairo).  The St.  Louis and Cairo had been built on the east side of the Mississippi River to perform the function which the St.  Louis and Iron Mountain had not satisfied.  After this line was built, the Columbus, Kentucky, terminal of the M&O became of almost no importance, and eventually the line down to the river was abandoned altogether.

In its quest for more traffic for the northern end of the line, the M&O determined to build a line from its Columbus, Mississippi, terminal on toward the southeast and Florida.  Contracts were let in 1896 for a line to run to Tuscaloosa and Montgomery, Alabama.  This line, together with the 9-mile Warrior Southern branch and the 11-mile Brocton branch was opened for service on June 30, 1898.

In 1898 the company decided to build a line to the southwest from Mobile.  As a result, the Mobile and Bay Shore Railway was chartered to build a 39-mile line from Mobile to Alabama Port and Bayou La Batre.  This branch, which was located wholly in the state of Alabama, was completed in 1899, and the M&O acquired title to the Mobile and Bay Shore Railway at that time.

Some of the additions to the line of the M&O proved of definite value to the company, but the road never was able to catch up with its two prosperous and aggressive competitors, the IC and the Louisville and Nashville.  For this reason, the board of directors of the M&O recommended that stockholders and bondholders of the M&O accept a security exchange plan which was offered by the Southern Railway on January 31, 1901.  The Southern wanted the north-south line of the M&O and was in a position to provide financial assistance which the M&O needed to remain in competition with its richer rivals.  Under its plan, the Southern acquired control of the M&O when the holders of 48,748 shares out of 53,206 shares outstanding exchanged their stock for 4 per cent Southern stock trust certificates.  At the same time the holders of a majority of the M&O general mortgage bonds exchanged their securities for Southern collateral trust gold bonds for the same amount, principal and interest, payable on the same dates and secured by the M&O general mortgage bonds.

This exchange plan was so nearly universally accepted that the Southern apparently, decided to merge the M&O into the Southern System.  A bill was introduced and passed by the Mississippi legislature of 1902 to allow such a merger.  Governor James K. Vardaman, who later became U.S. senator from Mississippi, objected to this strongly, and he vetoed the bill which had passed both houses of the legislature.  Since the legislature was not strong enough to override the veto, the merger plans were discarded.  The two lines worked closely together in the years from 1901 to 1930, but no further attempts at merger were made.

After acquisition of control by the Southern, the M&O ceased to have a separate operating policy.  Its affairs were fitted into those of the Southern whenever it was possible, and in no instance did the two roads compete with each other.  Under the guidance of the Southern, the M&O was able to secure new capital sufficient to make the road a major contender for traffic into and out of the Mobile area.  The road was so much improved that it paid dividends from 1908 to 1930 which more than reimbursed the Southern for its 4 per cent annual payments on the M&O stock certificates.  Throughout most of this period the M&O was considered to be a highly prosperous road, and its future looked relatively bright to the casual observer.  Trouble was brewing for the M&O however, and the decline of the national building boom in the late 1920’s showed the inherent weakness of the company.  Its net income declined sharply after 1926.  By 1930 a net deficit of almost $1,000,000 put the M&O into serious trouble.  The deficits continued and in 1932 amounted to $2,237,000.  The Southern was in serious difficulty by this time and was unable to provide further assistance.  Under such circumstances a reorganization was unavoidable.  On June 3, 1932, the M&O went into the hands of a receiver for the second time in its existence.  With the appointment of a receiver for the M&O the operating policies of the two roads were separated, and after that date the Southern had little day-to-day control of its subsidiary.  Not until 1938 was the Southern willing to consider divesting itself of its control of the M&O, and then the decision was largely forced on the parent road.  The Southern had commitments to the Reconstruction Finance Corporation which were coming due, and operating revenues at that time were not sufficient to provide funds for payment.  Under these circumstances the Southern reluctantly decided to sell its M&O bonds for cash in order to get funds to settle part of its account with the Reconstruction Finance Corporation.  Once the Southern had accepted its need to dispose of the M&O, the plea of I. B. Tigrett was listened to, and the merger of M&O and the GM&N became a reality.

An action by the Interstate Commerce Commission in 1929 also may have had some influence over the decision of the Southern to free the M&O.  In April, 1929, the Commission issued a complaint against the Southern alleging that the Southern was in violation of the Clayton Antitrust Act through ownership of the M&O and the New Orleans and Northeastern without the approval of the Commission.  The case was never pressed against the Southern and was finally dropped in 1933 after the M&O had gone into receivership, but the matter stayed in the public record.  After this action, the belief became widely held that the Southern had used the M&O for its own profit, at the expense of the M&O property and thus in effect the holders of other M&O securities.  Since the M&O certainly was not of great help to the Southern while in receivership, the Southern may have decided to avoid further criticism by disposing of its M&O bonds and thus dissolving all relations with the defunct M&O.  At any rate the action was decided upon and the Southern received about 93 cents on the dollar for its M&O bonds when the GM&N acquired them in 1940.


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