CHAPTER I

The Gulf, Mobile and Northern in 1920

ROADWAY AND EQUIPMENT

THE GULF, MOBILE AND NORTHERN was definitely not a prize railroad, by national standards, when President Isaac Burton Tigrett accepted control from the federal manager on March 1, 1920.  It was not held in high regard even by the low-income Mississippi farmers who lived along its lines, except as a source of cash money to be obtained via the damage-suit route.

This GM&N of 1920, like its more famous and prosperous descendant, the Gulf, Mobile and Ohio (GM&O), was a product of merger, consolidation, and construction.    The newest part of the 409 miles of main line was the 40 mile span from Middleton, Tennessee, to Mr. Tigrett’s home town of Jackson, Tennessee, county seat of Madison County.   This stretch was so new in 1920 that the engineers were still working on ballasting and still trying to stabilize some of the most troublesome deep cuts through the Tennessee hills.

The sector from Middleton south to Pontotoc, Mississippi, was the oldest part of the line.  It was begun in 1871 and was built in large measure by the efforts of the colorful Colonel W. C. Falkner, Confederate military hero, author, and businessman.  The labor to build most of these 62 miles of line was provided by Mississippi convicts, who were leased by the state to Colonel Falkner for subsistence and a few cents per day “rental.” The first 24 miles, built between Middleton and Colonel Falkner’s home at Ripley, Mississippi, were constructed for the purpose of moving the produce of the territory to market via connections with the Southern Railway (Southern).  The next 38 miles, from Ripley down to Pontotoc, were built as part of a larger scheme to connect Ship Island, Mississippi, with the industrial North via Ripley and Colonel Falkner’s road.   Politics and personalities interfered, the grand project collapsed, and its properties were split.  The southern section became known as the Gulf and Ship Island Railroad (G&SI), which built into Jackson, Mississippi, and later became part of the vast Illinois Central (IC) system.

Not long after Colonel Falkner built his sector of the future GM&N, another Southern promoter began work on a master rail plan.  F. B. Merrill and associates, of Mobile, Alabama, saw that the great pine timber regions of South Mississippi were ready for the logger’s axe.  Moreover, a prime market existed for this unexcelled long-leaf pine lumber in the North and East, where usable lumber was fast being cut out.  In 1890 a railroad was chartered to tap much of the virgin timber area near Mobile.  The road, as proposed, would run to Jackson, Mississippi; and, in the minds of the promoters, would extend eventually to the great rail terminus of the new West, Kansas City, Missouri. 

By 1902, the Mobile, Jackson and Kansas City, as the new railroad was called, had built all of 50 miles of line to the new city of Merrill Mississippi, located in the swampy bottom lands of the Pascagoula River.  Later, the road was built on to Beaumont and Hattiesburg, Mississippi; but about this time Merrill passed from the scene, and the objective no longer was Jackson and Kansas City, but Chicago.  The new directors saw that the narrow-gauge 62 mile Gulf and Chicago, as Colonel Falkner’s line was now known, would be in the direct line north; therefore, they bought control from the Falkner family.  The Gulf and Chicago and the Mobile, Jackson and Kansas City were operated by one management, even though some 240 miles of Mississippi farm and forest land separated the two parts.

After several years of construction effort, during which the Gulf and Chicago was widened to standard gauge and countless lawsuits were fought, the rails were finally joined at Pearl River Bridge, near the village of Burnside.  The New Orleans, Mobile and Chicago Railroad was organized to succeed the Mobile, Jackson and Kansas City, which collapsed soon after the “silver spike” was driven.  The new line inherited the connected track and not much else.  It is correct to say connected, rather than completed, because 54 miles of line were still unballasted in 1917, nearly ten years after construction of the road.  

The New Orleans, Mobile and Chicago itself collapsed in 1913 and finally was succeeded by the GM&N, which took charge from the receivers on January 1, 1917.  Before the end of 1917, control of the property passed, as did that of most other railroads of the nation, to the federal government.  Thus it was not until 1920 that the GM&N really had a chance to show what it could do with the line. 

In addition to its 409 miles of main line, the GM&N in 1920 had three branches, none of which was regarded as a permanent connection by the incoming managers.  The most prosperous of these was the Blodgett branch, which was the newest of the three and was still being extended in 1920.  It ran eastward from McLean Junction to Piave, Mississippi a distance of 28 miles, and opened up an extensive timber area between the GM&N and the Mobile and Ohio Railroad (M&O).  Its timber tonnage soon gave out and it was given up.   Both the Hattiesburg branch and the Ellisville line, 6 ½ miles long were quickly disposed of also. 

One segment of the GM&N, which was treated almost as a branch although it was a separate company, was the 30-mile Meridian and Memphis Railway.  The GM&N had bought all of the stock and all of the bonds of this road in 1918 and it was operated as a part of the main road giving entry into Meridian, in 1920, the largest city in Mississippi with a population of 23,399.

A good description of the physical characteristics of the GM&N as of June 30, 1917, was prepared by the Valuation Section of the Interstate Commerce Commission and was still quite accurate for 1920.  Pertinent excerpts from the ICC report are reproduced below:

PHYSICAL CHARACTERISTICS OF ROAD     

      Grades:

                The maximum grade on the Mobile division between Mobile, Ala., and Louisville, Miss., is 1.4 per cent northbound and 1 per cent southbound.  On the New Albany division between Louisville, Miss., and Middleton, Tenn., the maximum grade is 1 per cent in either direction.  The ruling grades do not exceed 1 per cent.

                Curvature:

                The maximum curvature between Mobile, Ala., and Louisville, Miss., is 4°; while between Louisville, Miss., and Middleton, Tenn., it is 5°....

                Ties:

                About 35 per cent of the crossties are creosote treated.  The untreated ties are pine and oak.  The number of ties per mile of main track is about 3,200.

                Rails:

                The main line from Mobile, Ala., to Laurel, Miss., is laid principally with new 70-pound rail; from Laurel to Louisville, Miss., with new 70 and 85 pound rail; and from Louisville, Miss., to Middleton, Tenn., with new 70 and 85 pound and relay 70 pound rail.  The branch lines are laid chiefly with new 60 pound rail.

                Ballast:

                 The main line is ballasted chiefly with gravel.  Other materials used are principally cinders and sand.  About 54 miles of the main line at various locations and practically all of the branch lines are earth surfaced....

The physical property of the GM&N in 1920 had changed little since 1917, except that the property had been undermaintained because the line was not considered to be vital to the war effort.   Both roadbed and equipment were in bad repair at the time that the road was returned to its owners, but the condition of the roadbed was more critical than the equipment.

One of the best examples of the weakened condition of the roadbed in March, 1920, was the increase in expenditure which had to be made in 1920 over the year 1919.  According to the Annual Report for 1920 the Company had to install 85,254 creosote crossties, whereas in 1919 only 4,602 creosote ties were used.  The total number of treated and untreated ties was increased from 154,798 in 1919 to 215,184 in 1920.  The amount of bridge material and piling which the Company was forced to use showed an even greater percentage increase than did the crosstie installation.  In 1919 the road used 884,561 feet of bridge material, but in 1920 this was increased to 2,651,335 feet.  Pilings used in 1919 amounted to 42,764 feet; in 1920 this figure was raised to 135,176 feet, an increase of more than 200 per cent.

ALABAMA TERRITORY SERVED BY THE ROAD IN 1920

Mobile was always the site of the GM&N’s home office and one of its biggest tonnage producers.  Its 1920 population of 60,771 was about 10,000 more than in 1910.   This meant that in 1920 Mobile was almost three times as large as Meridian, the GM&N’s second largest city.  In addition, the port of Mobile was the biggest single source of tonnage for the railroad, if one excepts the lumber tonnage produced by all the sawmill communities in Mississippi in combination.   Except for brief wartime spurts in shipbuilding and navigation, Mobile was in the commercial doldrums for many of the years following the Civil War.  For a number of reasons, Mobile had been declining in importance in relation to the other Gulf ports, in spite of the fact that she was one of the oldest and had been quite prosperous earlier.   Table I shows the deterioration of her harbor activities.

 Port facilities in Mobile in 1920 were extensive but not organized for the highest possible use.  The city and port of Mobile are located on the west bank of the Mobile River, some 33 ½  miles from the Gulf of Mexico.  Within the downtown city, the Mobile River empties into Mobile Bay, which is wide and very shallow over most of its area.  The lower part of the bay deepens considerably and opens into the Gulf through a rather narrow pass called Mobile Bar.  By June, 1914, a ship channel had been dredged from Mobile Bar to the docks of the city, with a usable minimum depth of 26 ½ feet at low tide.  In 1920 this still was the usable depth, but a U.S.  Department of Engineers project was under way which, when completed in 1921, would deepen this channel to 33 feet at the Bar and 30 feet up to the city docks.  North of Mobile the channel of the Mobile, Tombigbee, and Warrior rivers extended for 443 miles to the coal fields of North central Alabama.   The Inland Waterway, across the Gulf, was of little benefit except for petroleum products for the city.

Terminal facilities at Mobile were owned in large measure by the railroads serving the area.  The M&O and the Southern jointly owned or used the best wharves and docks in the city.  The Louisville and Nashville owned about 1 mile of the commercial waterfront, much of which was well located but was not in active use.  The Alabama, Tennessee and Northern (AT&N) was a newly consolidated road in 1920 and had little in the way of port facilities.  The GM&N owned an extensive area of waterfront south of the city, but only a small part of that was developed.  The city of Mobile owned some dock and wharf space, but this was used chiefly by barge traffic on the various waterways.  Turner-Hartwell Dock Company owned the best private facilities in the area and was, in fact, servicing the GM&N and the L&N to some extent.  There was no belt or harbor rail system in 1920, and some felt this to be the greatest defect in the port structure. 

In spite of this rather dark picture, there were a few bright spots pointing to a possible change in Mobile’s future.  Many local people were aware that their businesses were not growing and for a number of years had been agitating for a change.  As early as 1914 the Mobile Chamber of Commerce had carried the problem of railroad confusion and lack of co-operation to the Interstate Commerce Commission in Finance Docket No.  5899, Mobile Chamber of Commerce et al. v. Mobile and Ohio Railroad et al.

On November 30, 1914, the Commission ruled in favor of the city of Mobile and ordered the railroads serving the port to make certain changes to prevent continued discrimination.  The M&O and the Southern were ordered to set up reciprocal switching in the entire port area and to allow any and all carriers to serve ships through the docks owned by the two roads.  The L&N was ordered to issue through bills of lading for cotton shipments through Mobile in exactly the same way it served Pensacola, Florida.  This victory for Mobile over the private desires and programs of the competing railroads went a long way toward opening up the port facilities for better development.  It also pointed the way for growth of Mobile’s port by means of concerted action to obtain better facilities and to make better use of those improved docks and wharves.

This effort by the people of Mobile had its effect on the state of Alabama.  Since Mobile was Alabama’s only port, it was not too difficult to get the state to assist the city in its development program.  No action was taken prior to 1920 but the State of Alabama voted to construct new facilities and this led to the building of the new and modern Alabama State Docks, which were completed in 1929, to serve all phases of the port’s development.  Through these projects, and others which the awakened city developed later, the port of Mobile after the depression of the 1930’s began to live up to its possibilities.

MISSISSIPPI TERRITORY SERVED BY THE ROAD IN 1920

Since some 90 per cent of the GM&N’s main line and branch mileage in 1920 was in Mississippi, the economic prospects of Mississippi would tell heavily on the future prospects of the GM&N.  National comparative averages might not show it, but in 1920 Mississippi was in the midst of the second boom in the state’s hundred-year existence.  It is true that her income and economy rose and fell somewhat in keeping with the rest of the nation, but these two booms were separate from that movement.  The first boom period was before the Civil War when the lands of the state were new and fertile and cotton was still in such demand that there was no production question, except as to the amount which could be grown.  The years 1861-65 ended that period; it has never returned, in spite of occasional years of high cotton prices due to war, the boll weevil, or other outside influences.  The second boom period of major proportions was occasioned by the exploitation of the tremendous stands of virgin pine and hardwood timber which originally covered well over two-thirds of the entire state.  This period began roughly about 1890 and lasted until the end of the national building boom in 1928-29.  The GM&N was constructed as a common carrier in the early part of this era; and the foreseeable end of this boom, due to exhaustion of the timber, made its future appear not too bright.  

Mississippi, like most other land areas of equal size, is divided geographically, economically, and politically into smaller sections or unofficial subdivisions for comparative purposes.  Because of the distance between Tennessee on the north and the Gulf of Mexico on the south, it is easy to divide the state geographically into North and South Mississippi.  This basic division, because of geologic and economic differences, has been carried into the social and political life of the state.  The Alabama and Vicksburg Railroad (A&V) ran approximately 25 miles below the geographic center, but for practical purposes it served as the dividing line.  This railroad, one of the oldest in the state, ran from Vicksburg, on the Mississippi River, through Jackson, the state capital, to Meridian, near the Alabama line.  These three towns were, in 1920, and had been for the past 40 years, the largest in the state. 

One more sectional unit in Mississippi should be mentioned here, because it has always been used for comparative purposes when the wealth of Mississippi is discussed.  By far the richest agricultural part of the state is the Delta.  People not familiar with the geography of Mississippi immediately think of the Mississippi River delta, located well below New Orleans, and therefore question the name.  In reality, it is derived from the fact that the Yazoo River flows into the Mississippi just above the Vicksburg hills; hence, the area, strictly speaking, is the Yazoo Mississippi delta, but by popular usage the state has adopted the shortened name.

The Delta, elliptical in shape, by common description “begins in the lobby of the Peabody Hotel in Memphis and ends on Catfish Row in Vicksburg.”  This is a distance of approximately 175 miles; its widest point, between Greenville on the Mississippi River and Greenwood on the Yazoo, is about 60 miles.  The Delta comprises only about one-fifth of the land area of the state but consistently produced close to one-half of all its agricultural wealth.  This very rich agricultural region produced no tonnage for the GM&N however, because the IC had seen its value long before 1920 and had pre-empted its railroad facilities.

The Delta was Mississippi’s richest farming section; South Mississippi was, in general, the poorest from an agricultural standpoint.  Bolivar, the richest of the Delta counties, produced agricultural crops worth $23,115,000 in 1920.  This was just about twice as much as all the crops in the seven South Mississippi counties through which the GM&N ran.  The entire GM&N territory, that is the sixteen counties served by the road, produced $38,900,000 in agricultural crops, whereas two Delta counties, Bolivar and Coahoma, together produced crops worth $39,848,000.          

In timber production, however, the situation was reversed.   South Mississippi and the counties just north of the Alabama and Vicksburg Railroad supplied the bulk of the timber Mississippi produced, as well as the bulk of the GM&N’s tonnage.  Of the road’s sixteen counties, ten could be classed as major timber producers, and these ten counties had about 11 per cent of the state’s population in 1920.  According to the Census of Manufactures for 1919, these ten counties received 22 per cent of the industrial wages paid in the state.   These counties produced manufactured goods valued at 21 per cent of the state’s total, and 23 per cent of the value added by manufacture was credited to these ten counties.  Since approximately 64 per cent of Mississippi’s industrial wage earners were engaged in logging or sawmilling, it is apparent that forest products played a tremendous part in the economic life of this sector of GM&N territory.

Mississippi had been a major producer of the nation’s lumber for many years, and for a number of these years the exhaustion of this valuable resource had been foreseen by students of the industry.  As early as 1909, C.E.  Dunston of the United States Forest Service made a survey of forest conditions in Mississippi and issued a warning about “the approaching exhaustion of the timber supply.”  It is reproduced in Figure I.

The six counties located north of the timber area of the GM&N were devoted almost exclusively to agriculture.  The 1919 total of industrial wages paid in these six counties, with a total population of 102,772 in 1920, was only $513,000.  Winston County, the northernmost of the GM&N’s major timber-producing counties, had industrial wages of $546,000, with a population of only 18,139.

According to Dunston’s 1909 study, the timber which had originally stood on much of the land in these six counties had long since been cut.  Two of the six, Choctaw and Webster counties, were served by older railroads than the GM&N; hence, timber in these counties had already been exploited prior to the development of this road.  The four remaining counties were in a tier of high arable lands which had been cleared first, when the northern part of Mississippi was opened to settlement.  The town of Pontotoc had become the headquarters for federal land sales in this area soon after the Treaty of Pontotoc, which was signed in 1832.  The county of Pontotoc was in the midst of this ridge land, which was highly fertile, but which was, unfortunately, much subject to erosion.  E.  N.  Lowe, state geologist for Mississippi for many years, made the following comment about this Pontotoc Ridge region: “All the soils of this region are so mellow that they wash readily, and everywhere in the older cultivated lands, extensive erosion has scarred the slopes, rendering much of the land worthless.” This was the area served by Colonel Falkner’s narrow-gauge road, which had been built through the heart of these counties to afford a means of moving the cotton crops of an earlier era to market.  This accounts for the fact that the more northern part of the GM&N in 1920 did not run through the best timber left in these northern counties.

No mention has been made of mineral wealth along the GM&N in 1920, for the reason that there was virtually none producing tonnage or revenue for the road at that time.  The oil of South Mississippi was not to be discovered until some 20 years later; and prior to World War II comparatively little use was made of the clays and limestone rocks which make up the other potential mineral reserves known to exist in the state.  Mineral production in Mississippi was so low that the Census Bureau lumped Mississippi production with that of Louisiana - the only state so treated - and no statewide records were kept.

Perhaps the best indicator of the general lack of retail trade in Mississippi territory served by the GM&N is the fact that in 1920 only four towns in the entire area had a population over 2,500.   One of these, Hattiesburg, with a population of 13,270, could not correctly be called a true part of GM&N territory, as it was at the end of a failing branch line.   Meridian, also, was off the main line of the road, but it was much more vital to the road than was Hattiesburg.   This left Laurel, with a population of 13,037 and New Albany, which just edged into the 2,500 class with a census count of 2,531.   All the other Mississippi station points ranged below this figure, indicating that basically they were supply points for the farm and timber areas surrounding them.

TENNESSEE TERRITORY SERVED BY THE GULF, MOBILE AND NORTHERN IN 1920

Hardeman County, Tennessee, through which the GM&N ran after leaving Mississippi, was quite similar in topography and economic development to the North Mississippi counties immediately south of it.  Its total of $4,113,000 for agricultural crops put it ahead of Tippah County’s $3,316,000 but slightly behind Union County’s $4,207,000.  Its $42,000 in industrial wages was behind Tippah’s $52,000 and not quite half of Union’s $94,000.

Madison County presented a better-balanced economy than most of the counties along the GM&N.  Agricultural crops in Madison were valued at $5,824,000; and, in addition, Jackson, the county seat, was a thriving small city.  Most of the $2,501,000 in industrial wages paid in 1919 went to the citizens of Jackson, but its force was felt throughout the county.   Jackson’s population had increased almost 20 per cent to 18,860 in the decade 1910-20.  Many of its men worked in the railroad shops in the city or in other year-round occupations which helped to stabilize the county income to a marked degree.

THE GULF, MOBILE AND NORTHERN’S TRAFFIC CONNECTIONS IN 1920

Because of the economic conditions existing in GM&N territory during l920, the road could not hope to increase its local freight business very rapidly.   There remained the other source of tonnage which exists for most roads, its business done with connecting roads.  The possibilities were these: (1) to get longer hauls and/or better rate divisions; (2) to get business being handled by other carriers; (3) to create new services or develop new customers for export or import business.  Since this chapter is concerned with the status of the GM&N in l920, the matters which are of interest here are the connections the GM&N had with other roads and the possibility of increasing traffic at each point. 

In l920 Mobile was served by the M&O, the Southern, and the L&N as well as the GM&N and the AT&N.   Since all of these roads hauled in a northerly direction, the only hope the GM&N had of receiving tonnage at Mobile from these roads was the small amount of material that might be destined for some point served exclusively by the GM&N. 

North of Mobile, the first interchange connection was at Evanston, Mississippi, with the Mississippi Export Railroad, which in 1920 was known as the Alabama and Mississippi Railroad Company.  This small road began at the then minor port of Pascagoula, Mississippi, which was also served by the L&N.  For this reason, the connection at Evanston, while worth protecting, was not expected to become very profitable to the GM&N in the near future.  The G&SI connected with the GM&N at Laurel and also at the almost-abandoned branch line town of Hattiesburg, but it could not be expected to be of prime benefit to the GM&N because it ran northward to Jackson, Mississippi, where it connected with the IC.  It could get a longer haul for itself by shipping over its own lines to Jackson, Mississippi, than by turning over northbound freight to the GM&N at Laurel or Hattiesburg.  Furthermore, at both these points the GM&N had to face the competition of the NO&NE, which previously has been mentioned as a subsidiary of the Southern. 

The Alabama and Vicksburg Railway connected with the GM&N at Newton, Mississippi some 30 miles west of Meridian.  This point held little value for the GM&N because the Alabama and Vicksburg connected at Meridian with the M&O, as well as with the Southern, and at Jackson, Mississippi on the west with the IC.  Thus, the Alabama and Vicksburg could seek for itself the best deal to be offered by the IC, the GM&N, the M&O, or the Southern on northbound traffic.  Southbound freight which the Alabama and Vicksburg controlled could be shipped via the Southern or the GM&N to Laurel, or via the M&O or the GM&N to the port of Mobile.

The GM&N subsidiary, the Meridian and Memphis, joined the main line at Union and because of this fact was a potentially valuable connection for getting freight into, and out of, the city of Meridian, Mississippi.  At that point, however, the GM&N had to meet the competition of the M&O and the Southern on northbound freight and on southbound freight to Mobile, Laurel and Hattiesburg as well.

Ackerman, Mississippi, was the next interchange point, and the road crossed at this point was a branch line of the IC.  Naturally, the GM&N could not expect any through freight business from this connection.  North of Ackerman, the next connecting point was Mathiston, where another of the Southern’s Mississippi subsidiaries crossed the GM&N.  This road, later known as the Columbus and Greenville, ran between those two points.  The only freight interchange the GM&N received from this line was on local business, since the M&O’s line was only 26 miles away at West Point, Mississippi.

One of the few really helpful connections of the GM&N was at New Albany, Mississippi, where the St.  Louis-San Francisco (Frisco) line from Memphis, Tennessee, to Birmingham and Pensacola crossed the GM&N.   The GM&N could expect to get a fair distribution from the Frisco on Mobile-bound freight or on freight bound north from Mobile which the Frisco could control.   Even this junction was not without competition, however, for the M&O’s line also crossed the Frisco at Tupelo, Mississippi, some 26 miles southeast of New Albany.  The Frisco also had the opportunity of hauling on to Birmingham and giving the freight to the L&N at that point.  This New Albany connection was of great value to the GM&N, however, for through business.   Before the Jackson extension had been finished in 1919, almost no through freight went north of New Albany.

Middleton, Tennessee, where the GM&N crossed the Southern, was the next interchange point on the line.  The GM&N could expect no advantage at Middleton, however, for Corinth, Mississippi, also on the Southern, was only 24 miles away.  Since the Southern’s subsidiary, the M&O, served Corinth, all north-south business which the Southern could control would be turned over to the M&O at this point.  The only other point of contact was Jackson, Tennessee, the northern terminus.   Here the GM&N had physical connection and close working ties with the Birmingham and Northwestern, which for all practical purposes extended the line of the GM&N to Dyersburg, Tennessee thus enabling the GM&N to connect at Bells with the L&N.   At Jackson, the GM&N also had connections with the IC and the Nashville, Chattanooga and St. Louis (NC&STL), which ran northward to the Ohio River crossings at Cairo, Illinois, and Paducah, Kentucky. 

By its extension into Jackson, Tennessee, the GM&N was enabled to bid for business from St. Louis or Chicago to Mobile over four routes: (1) the IC; (2) the L&N; (3) the NC&STL; and (4) the Frisco at New Albany.  By the same token, the GM&N was in a position to “auction off” any tonnage which it might control to one of these same four roads.

The GM&N had little to hope for from many of its interchange points.  Its main chance to survive, therefore, was aggressive salesmanship coupled with superior handling of shipments.  The salesmanship was lacking in 1920, as well as the type of roadbed and equipment which would allow superior handling.  One of the first orders of business on the part of the new management was to correct both of these defects as rapidly as possible.

CORPORATE STRUCTURE IN 1920

The corporate structure of the GM&N in 1920 was almost unbelievably simple as compared to the average railroad Company.  Bonded indebtedness was almost nil, the only bonds outstanding at the beginning of the year being $27,000 of an issue put out in 1898 by the predecessor’s predecessor, the Mobile, Jackson and Kansas City.  The stock in the company was split between $11,072,50 common and $11,494,400 preferred.   Both kinds of shares had equal voting rights, which in the year 1920 was of little value to the individual owner of stock.   In the 1915 reorganization plan whereby the GM&N succeeded to the property of the New Orleans, Mobile and Chicago Railroad, a voting trust was set up to control the affairs of the new company from January 1, 1917, to January 1, 1922.   The members of the reorganization committee had been made the trustees and became, in turn, the nucleus of the Board of Directors.   This committee had chosen certain other men to serve with them, notably I. B. Tigrett, banker and part-time railroad president, to represent Jackson, Tennessee, and W. H. Coverdale, an eminent consulting engineer and specialist in railroad reorganizations.   Because of this tight control, it was possible to achieve a closeness of contact between the Board and the management which was to serve admirably in making quick decisions on corporate policy.   It was almost as if this group of men owned the railroad personally.  Whatever policies they felt would best serve the long run future of the road could quickly be put into practice. 

This ease of decision on the part of the Board was offset by the fact that, if personalities did not limit the actions of the Company, financial matters did.  Fortunately, there were no bonds on which to pay interest, for there was almost no money available for that or any other purpose.  According to the corporate balance sheet for December 31,1919, the company had about $152,000 in current assets and about $820,000 in current liabilities.  Mr.  Tigrett’s first task on assuming control was to secure funds from outside sources so that the road could continue current operations.  The credit of the company was so bad that the two largest banks in Mobile refused any loans for any purpose, even on a short-term basis.  Mr. Tigrett recounted the fact that what was then the smallest bank in Mobile, but which became the largest, did offer to lend between $50,000 and $100,000 dollars on rather stiff conditions.  The loan was never completed because government funds on longer terms were made available before matters became acute enough to require recourse to this short-term bank credit.  The management of the GM&N appreciated the offer, however, and in later years large funds were kept on deposit in the bank partly in appreciation of this offer of assistance.

The primary reason that the Mobile banks were unwilling in 1920 to lend money even for current operations was the fact that, in spite of wartime inflation of the economy, railroad expenses in general and GM&N expenses in particular were running well above receipts.  As long as the U.S. Treasury was behind the Director General of Railroads, expenses were secondary and performance was the main objective.  The private companies, however, were not so blessed with a seemingly inexhaustible treasury; and the GM&N was in more trouble than most other roads because it had never had a chance to build a surplus after it began operations in 1917.  Thus, the railroad had to try to maintain service, increase expenditures for maintenance of way and equipment, and increase expenditure for traffic solicitation while expenses of current operations were higher than income from transportation service.  This was true at a time when the road had almost no call to pay fixed charges.  It was fortunate indeed that the reorganization, begun in 1915-16, had eliminated the road’s bonds.  Otherwise, a new bankruptcy certainly would have occurred at this time.

There is little doubt that a combination of three government moves which were made early in 1920 to assist weak railroads allowed the company to continue its program of improvement.   The first of these was the government guaranty for a six-month period of earnings of all railroads which elected to accept the guaranty.   The second act was the establishment of a loan fund from which railroads could borrow for operating purposes under certain conditions.   The last of these government moves was an offer of the War Department to sell certain railroad equipment which had been built for wartime delivery to Russia.   Transfer had not been consummated prior to the Russian withdrawal from the war; therefore, the government had surplus stocks on hand, and the GM&N was able to obtain some of the equipment, which was sold on generous credit terms.

It may be assumed that the physical plant which the GM&N owned would not have been dismantled immediately if these government measures had not been taken, but it is doubtful that the management which I.  B.  Tigrett headed would have survived 1920 if these aids had not been available.

MANAGEMENT PROBLEMS IN 1920

Without doubt, the number one problem in March, 1920, was to build a cash position which would maintain a permanent operating structure.  Even if the Board of Directors and the stockholders were aware of the difficulties to be faced and foresaw a period of deficit operations to build the road into a permanent carrier, this particular road could not continue to function without operating capital.  This may well have been the deciding factor in the “temporary” choice of Mr. Tigrett, a banker first and a railroad manager second, to be the President of the GM&N in 1920.

The second major problem had been faced and answered prior to 1920 by the Board of Directors, but any new management, of necessity, would have to determine its own answer to the question.  The desire of the Board was to build up this road, constructed primarily as a log hauler, into a permanent diversified common carrier.  The Board had made this choice when it built the 40 miles of road into Jackson, Tennessee, to escape the problem of a “dead-end street” at Middleton.  This decision, however, had to be reconsidered by management after the end of the war and in the light of new competitive conditions.

Once the decision to continue the struggle to grow was reached, an entire host of related problems arose.  The first of these was the matter of reducing operating expenses as rapidly as other conditions would allow.  Aside from building morale for a growing organization, the separate problem of keeping a functioning force of employees was a deterrent to a very rapid decrease in the size of the payroll, largest single expense item.  Wage increases, which had just been won from a sympathetic federal manager, could not be taken away precipitously without the inevitable reaction of strikes and possibly more serious consequences. 

In addition to the problems offered by the need to decrease expenses below revenues, the GM&N faced the necessity of rapidly improving its roadbed and equipment so that it would meet the standards necessary for permanent operation.    

Maintenance of an adequate work force to staff the road was essential but this new company also had to confront problems of morale and worker ability.  Any growth program which the GM&N might devise would suffer if not collapse, unless the employees were able to carry out that plan.  For these reasons, the GM&N management had to find ways quickly to evaluate its key employees and to help train most of its people for increased responsibilities.  Also, the road had the problem of bringing in additional people to be placed in new positions which older employees could not fill adequately.

The GM&N management recognized at the start that it had to try to replace its diminishing timber tonnage and also to increase other freight traffic at the same time.   It was decided that the most likely way to bring about this increase of traffic was to enhance the value of its traffic connections with other lines as much as possible, to seek the greatest help from the lines it joined.   Great effort was made to help the entire territory increase its productivity and to build a more valuable economic and social life in the area served by the road.   But the strongest effort put forth by the GM&N was to draw through traffic to its lines by the best possible arrangements of its traffic connections.   Along with the road’s desire to increase traffic to the highest possible level was the need to reduce its per ton cost of hauling this freight and its per passenger cost of travel to the lowest possible figure.  

Two other problems, which to some might be considered side issues, had to be faced by the 1920 management team.  The first of these was the extent of damage suits, particularly in the state of Mississippi.   In the period from 1890 to 1930 there was a tremendous amount of feeling in Mississippi against “furriners” and against “corporations”.   Part of this feeling probably came from the hatred of the carpetbaggers of the Reconstruction Period.   Much of it, however, was quite similar in its origin to the feeling that resulted in the Jesse James and other robberies of railroads of the Middle West in an earlier period.

Robberies were rare in Mississippi, but the feeling of animosity induced some of the people to try to profit financially at the expense of large corporations.  In many sections of Mississippi, railroads were the only corporations known to the people, so these roads often received the full force of these manipulations.  Damage suits against railroads were very common occurrences during this general period.  There was considerably less physical violence in the Mississippi method, but the railroads probably suffered greater damage in the long run.   The record does not show that the Board called on Mr. Tigrett to halt these practices on the GM&N; but soon after he was made President he personally assumed charge of a campaign to cause the road to be accepted more as a good citizen and less as a target for damage suits.

The last of the problems which management faced was that of dividend payments on the stock of the company.  Since there were no bonds to draw fixed charges, prior claim went to the preferred stock.  Mr. Tigrett apparently felt that he should not and would not continue long in control of the affairs of the Company if regular dividends could not be paid to preferred stockholders at an early date.  His later career proved that Mr. Tigrett constantly regarded as his first responsibility the proper functioning of the road as a service agency to the territory traversed.  He also kept sight of the corollary principle that, if possible, some return should be made to the investors who helped provide the facilities to render the service. 

Before concluding this chapter on the GM&N of 1920, a brief look at the top executives is in order.   The  Executive Committee, which in large measure was the governing body was composed of W. H. Coverdale, M. Hely-Hutchinson, J. W. Platten, A. H. S. Post, F. W. Scott, and I. B. Tigrett.  Of this group, Mr. Coverdale was the best informed in railway operating matters, while Mr. Scott of Richmond, Virginia, was a close second, especially in financial matters.

Much has been said about Mr. Tigrett and much more will be said because he was the symbol of the management of the GM&N-GM&O for 33 years.  He never really worked alone, but he almost always was able to find or develop the right man for most of the difficult tasks they had to face.   In all of those 33 years he was the rallying point of all persons who contributed to the growth of this rail system.  Undoubtedly, his greatest contribution was his ability to lead and mold his assistants into top-flight performances as railroad men and citizens.

Mr. Tigrett celebrated his forty-first birthday in 1920.  He had moved to Jackson, Tennessee, in 1903, had become cashier of one of the banks there, and had, in the intervening 17 years, become a highly respected young banker.  During the two years 1909-11, he had served as acting President of his alma mater, Union University, located at Jackson.  In 1912 he was elected President of the Birmingham and Northwestern Railroad, which was built with Jackson capital as a means of strengthening trade in the area between Jackson and Dyersburg.  When the GM&N wanted to build into Jackson, Tennessee, it sought for its Board of Directors a local man who had influence in the banking community, and I. B. Tigrett turned out to be the man selected.   Because of its interest in the new railroad and its faith in “Ike” Tigrett, Jackson bought $100,000 in common stock of the GM&N after the extension from Middleton was completed.   In 1919, when it became apparent that the government was to return the railroad to private control, W. H.  Coverdale, who had become well acquainted with the younger man, nominated Mr. Tigrett for the presidency.   This was a compromise move, and Mr. Tigrett was chosen to run the road “till someone better qualified could be selected.”  The choice may have been temporary to some, but Mr. Tigrett said that as far as he could remember no one ever challenged his leadership at a Board meeting.   One thing at least is on the record: Mr. Coverdale never, as long as he was on the Board, opposed any major policy that Mr. Tigrett proposed for the road.  Many men have made their influence felt on the GM&N over the years, but perhaps no others have had more to do with the growth than these two.   Mr. Coverdale had the strength of character and the professional standing to help convince the ruling New York financial circles that the GM&N had a fighting chance, and Mr. Tigrett in these early years worked early and late to prove that Mr. Coverdale’s confidence was not misplaced.