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To his Excellency, Robert M. Stewart,
Governor of Missouri: Sir: The law creating the Board of Public Works, makes it their duty, once in each year, to report to yoil, in regard to the "construction and management of each of the railroal companies in the State of Missouri.” The Board are authorized, shoulil they deem it necessary, to employ an engineer to aid them in their examinations. The Board concluded noť to employ an engineer, but to rely upon themselves for a proper discharge of the duties imposed by law,
There are six railroads in Missouri (including the South-West Branch), in the process of construction, and which have received the aid of the State, viz: the Pacific, the South-West Branch, the Iron Mountain, the North Missouri, the Hannibal and St. Joseph, and the Cairo and Fulton road. The aggregate of State credit granted to these roads, is $24,250,000, and $700.000 to the Platte Cowly load, making the whole amount of State credit authorized, in bonds, for all roads, $24,950,000. The aggregate of bonds issued by the State to the companies, is $16,010,000, which leaves $8,940,000 yet to be issued. Of this sum, $3,800,000 are bonds to be guaranteed by the State, for the nse of the South-West Branch of the Pacific Railroad : and, although these bonds are to be endorsed by the State, and bear seren per cent. interest, they are not regarded in the stock market as first class bonds, and cannot be sold for as much as bonds directly issued by the State, bearing an interest of only six per cent. The Board would suggest, that, as the proceeds of direct bonds would be greater than those arising from guaranteed bonds, and the interest less, by using the same securities, the State vould be as well protected on direct bonds, as it now is, upon guaranteed bonds, and that it miglit be good policy to substitute direct for guaranteed bonds.
more parcicular statement in regard to bonds authorized to each company--the amount received, sold and hypothecated by cach, with the discount on the same will be found in the tables and statements furnished for this report. The lowest rates as which bouds hare been sold, as shown by these statements, are 00 3-4 ly the Iron Mountain Company, 67 1-2 by the North Missouri Company, 67 by the Pacific Company, and 80 by the Cairo and Falton Coinpany. The fiscal agency in Boston, of the Hannibal and St. Joseph Compans, has furnished 10 statement later than the 1st of June, of bonds sold. Thio Board has requested the Secretary at Hannibal to obtain froin the agener a statement of bonds sold since that time, with the rate of discount on same, at the earliest possible day, and hopes to receive it in time to report before the Legislature adjourus.
The statements connected with this report also show the present condition of the several roads-their stock subscription, the amounts paid, and discount on same; their expenditures, liabilities and resources; the amount required to open the Iron Mountain road for business, the amounts expended by the Pacific Company to designated points west of Jefferson City; the amounts necessary to complete and make available the unfinished work west of Jefferson City; the amount required to open the North Missouri road to Mexico, and to the junction with the Hannibal and St. Joseph loail; the lenzth of track laid on the Iron Mountain, the North Missouri, and Hannibal and St. Joseph roads; the maximum grade of the sercral roads; the amount of interest to be paid by cach of the companies, &c. &c.
The change in the grade of the Hanibal and St. Joseph Railroad has attracted general attention, and been commented on by the press with a good deal of severity. In order to place the matter distinctly before the Legislature, the Board requested Mr. Hayward, the General Agent of the company, to state, in writing, what changes had been made from the grade adopted in the original contract. In Mr. Hayward's reply, it will be seen that he places the maximum grade at 80 feet to the mile, but also states that's a steeper grade has been permitted in five or six cases, not exceeding 105 6-10 feet per mile.*
He further states that “none of the steeper grades are arranged with reference to permanency, but are so adjusted as to be easily changed to conform to the original contract.” Mr. Hunt, the Chief Engineer, in his reply to questions, states that “the steepest grade over which the trains now run, is 95 feet per mile, and that it is surmounted without difficulty by their ordinary traing.”f In connection with this report, and to illustrate the effect of grades of various steepness, upon the capacity of a twenty-four ton locomotive to transport freight, we give a table in which the effect of grade is calculated up to 110 feet per mile. By this table it will be seen that a steep grade forms a great impediment to heavy freight trains. iight passenger trains are much less affected by steep grades. The difference between grades of 50 and 80 feet, on these light trains, is no doubt less than is generally supposed; but steep grades should never be adopted except when unavoidable. The materials used in the construction of the roads are believed, in the main, to be of good quality. It is the opinion of the Board, however, that instead of the trestle bridge over South River, on the Hannibal and St. Joseph road, an embankment should have been made. It would have been safer, more durable, and cheaper in the cud. The track on all the roads seems to be well laid, but is, to some extent, yet unballasted. When the ballasting is finished, and the drainage completed, our roads, in this respect, will no doubt compare favorably with the best roads in the country. The construction of these roads has created a large debt, and our bonds are greatly reduced in value. Some part of this reduction may be attribute to the mode adopted in putting tliem on the market. Instead of using them as a species of currency, to answer all the temporary exigencies of the companies to which they were issued, they should have passed through the hands of an agent, and been placed, as far as possible, in the possession of retired capitalists, whose chief inducement to hold them would have been the interest upon the capital invested in them. Now, their value can only be reinstated by establishing a sinking fund, pro
* See Mr. Hayward's statement. * See Mr. Hunt's statement. No. 2.
viding for the interest on the whole amouüs issued, and withholding, for the
$723.3.2 59 Additional amount required to open, for business, to Round
$215,400 CO The expenditures on the Iron Vountain Rozilamo!::t to....
3,367,142 09 Additional amount require:l to open the road through for busine3;, 476,00 00 The expenditures on the North Missouri Roll amount to
3,921,218 53 Amouat required to open the road to Mexico.
$397,900 00 $7,914,91381 These figures show the amounts expended, and the additional amounts required to open the roads to the points designatel. It is believed that the business of the Iron Mountain Road will be very limited until the whole work is completed ; then, a large business is anticipated for it by those who profess to be familiar with the resources of the country through which it
The business of the North Missouri, it is thought, will be greatly increased by extending the road to Mexico. The extension of the Pacific to Round Hill will accommodate a large scope of country, and, it is thought, will add considerably to the revenues of the company. The statement concerning the Cairo and Fulton Railroad was prepared by the President of that company, and presented to the Board.
The length of track laid on each of the roads is as follows:
G. W. HOUGH,
OFFICE OF PACIFIC RAILROAD Co.,
St. Louis, October 26, 1857. S To the Board of Public Works :
GENTLEMEN : Herewith you will receive detailed statements of the affairs and condition of the Pacific Railroad, as called for, and from which you can draw your own conclusions of our prospects and wants :
You will see that our floating debt is large ; and why it is so large, I will briefly explain :
The act approved 3d March, 1857, gave to the Pacific Railroad one million of bonds, without, in fact, requiring any further expenditure, as the expendtures required west of Jefferson City, by the law, had already been made.
As soon as the bonds could be issued, I repaired to Nerv York to make negociations, and provide means to meet the heavy payments of the company, then fast maturing. Arriving in that city about the 20th March, I found Missouri bonds much depressed, and selling but slowly, at about 83 cents; being about five per cent. below the rates of the preceding months. The decline was attributed to the number forced on the market by the Free Banks of the Western States and the rumor that this road would be compelled to put one million of bonds on the market to meet pressing indebtedness.
Believing that our bonds were worth more, and that the Banks would soon find a demand for their circulation, when they would be buyers instead of sellers of our bonds, and learning that the financial news from Europe was encouraging, with a prospect of a demand for American securities during the summer, from that quarter, I decided to try and make arrangements for holding our bonds for an advance of price, and in this policy I was encouragerl by some of the most intelligent business men of New York.
Having so decided, the next thing was to make negociations for advances on the bonds, to be reimbursed by sales when the market should improve. The North Missouri Railroad Company, and the St. Louis and Iron Mountain Company, had, early in their progress, made arrangements with E. D. Morgan & Co., to act as their fiscal agents in New York ; and knowing the importance of all the roads acting in concert in the sale of State Bonds, I applied to E. D. Morgan & Co.,to make the necessary advances to meet our payments, and to become our agents for the sale of bonds. An agreement was made
with that Housc, by which they were to hold the bonds sixty days, if the company should desire, and to make advances and sell the bonds upon the same terms specified in their contract previously entered into with the North Missouri Railroad company.
Having completed this arrangement, I retuned home and endeavored to push the work west of Jefferson City, with a hope of having the road open this fall to California and Round Hill ; but in this I have been greatly disappointed.
In May I returned to New York, and finding our bonds still dull, I made an arrangement to borrow money for twelve months, at ten por cent., giving bonds as collateral at 78 cents on the dollar; and under this arrangement $390,000 were raised in May and June, on a pledge of 500 State bonds.
After my return from Ner-York, in the latter part of liay, Missouri bonds declined to 81 or 82, and our agents urged a sale so as to reduce their advances ; but I objected, and to prevent a sale, I borrowed $50,000 here, and remitted to our agents on account of their advances, to prevent sales being made ; in short, our bonds gradually declined under the dulhess of the stock market, and the heavy amounts selling on railroad account, until the commencement of the late financial disasters, which run them down below 70 cents; and some of our bonds have been sold at these ruinous rates, and we are still in condition to suffer from the money pressure, as we have a large indebtedness maturing, with the dificulties of raising money increase almost to impossibilities.
The holding up bonds and declining to sell at 81, 82 and 83, las proved to have been a great mistake, for when advised to scil at what I considered these loir rates, I would not consent to what I considered a sacrafice of our State securities.
I was aware that a large amount was being pressed upon the market, and I had reason to believe that this pressure would soon cease, and that capitalists would learn the iatrinsic value of Missouri bonds, and a better demand would soon spring up; and our London correspondents encouraged the idea of a market being opened there for our bonds in case the Legislature made provision for maintaining the credit of the State against contingencies.
Believing that provision would be made, that would bring up our bonds to at least the rates paid for Virginia bonds, and being unwilling to countenance or sanction the sacrifice of Missouri bonds, I held on and refused to sell until it was too late ; and although it has proved to be a miscalculation, yet under the same circumstances—with the same light before memI should do so again. I felt that the interest of the State, and the other railroads were involved, as well as the interest of the road I represented, and my efforts were to maintain State credit, not to depress it; and I yet have the hope of soon seeing our bonds appreciated and to take their just rank among State securities. Judicious action by the Legislature, and the railroad companies, must insure this result at an carly day; and this is the only explanation I have to make for our large indebtedness.
The South-West Branch has received the attention that its importance demanded. Every effort was made during the spring and summer, to negociate the guaranteed bonds, both in this country and in Europe, but without success. It being a guarantecil, instead of a State bond, has every where been urged as an objection to the bond, and I am not satisied that à Státe six per cent. bond, would sell better than the guaranteed seven per cent. bonil.